a non expected utility model and its application in practical auctions this article presents a non expected utility decision model which is nonlinear in the winning probabilities the model not only explicitly expresses bidders attitudes to risk but also addresses t

auction guarantees for works of art abstract this paper addresses the question of whether auction guarantees change the bidding environment and whether they cause a change in price once the value of an item is taken into account we analyze both the cases of third party guarantees and in house guarantees we use two datasets one of christie s and sotheby s contemporary and impressionist evening sales from january 2010 to february 2012 and another larger dataset consisting of all items auctioned at christie s from 2001 to may 2011 while more expensive items are more likely to have guarantees we find little empirical evidence to suggest an effect on price from the guarantee itself once the value of the item is taken into account

asymmetric price benefits auctions abstract this paper studies the performance of two auction procedures for allocating the assets of a dissolving partnership when partners valuations for the assets are independent and asymmetrically distributed with one partner reputed to be more interested in the assets to be divided we provide results on existence and uniqueness of the equilibrium induced by these auctions comparative statics are developed especially the differences between relative efficiency and revenue from the two auctions journal of economic literature classification numbers c72 d39 d44 d52 d74 d82

exporting financial institutions management via foreign direct investment mergers and acquisitions we test the relevance of the new trade theory and the traditional theory of comparative advantage for explaining the geographic patterns of international m as of financial institutions between 1985 and 2000 the data provide statistically significant support for both theories we also find evidence that the u s has idiosyncratic comparative advantages at both exporting and importing financial institutions management

good principals or good peers parental valuation of school characteristics tiebout equilibrium and the incentive effects of competition among jurisdictions good principals or good peers parental valuation of school characteristics tiebout equilibrium and the incentive effects of competition among jurisdictions by j esse m r othstein school choice policies may by aligning admin istrators incentives with parental demand yield improved efficiency in educational production milton friedman 1962 john e chubb and terry m moe 1990 but eric a hanushek 1981 cautions if the efficiency of our school systems is due to poor incentives for teachers and admin istrators coupled with poor decision making by consumers it would be unwise to expect much from programs that seek to strengthen market forces in the selection of schools p 35 empha sis added poor decision making is not required parents may rationally choose schools with pleasant surroundings athletic facilities cultural advantages ibid p 34 over those that most efficiently pursue academic performance they may prefer poorly run schools with good peer groups over those that are more effective but en roll worse students j douglas willms and frank h echols 1992 1993 or they may simply be unable to identify effective schools thomas j kane and douglas o staiger 2002 any factor that leads parents to choose any but the most effective available schools will tend to dilute the incentives for efficient management that choice might otherwise create this study examines the distribution of stu dent outcomes across schools within metropol itan housing markets for evidence on parental demand economists have long noted that par ents choices among residential locations are potentially informative about how more com plete choice systems may operate charles m tiebout 1956 melvin v borland and roy m howsen 1992 caroline m hoxby 2000 rothstein 2005 1 i ask whether school effec tiveness plays a sufficiently important role in these decisions to create meaningful incentives for more productive school management i adopt a specific understanding of effective ness appropriate to the question at hand a substantial portion of between school differ ences in student performance can be attributed to differences in student body composition this portion includes the effects of individual stu dent characteristics on their own test scores any direct peer group effects and any indirect ef fects of a school s composition on the quality of its instruction if wealthy schools attract better teachers joseph r antos and sherwin rosen 1975 or more parental involvement this is for my purposes a peer effect it depends on the quality of the school s administration only via school composition a school administrator cannot attract demand by offering a school with wealthy students as these can be offered only if wealthy families demand the school in the first place only the remaining portion of a school s contribution to test scores is effectiveness 2 department of economics and woodrow wilson school princeton university wallace hall 3 rd floor princeton nj 08544 e mail jrothst princeton edu i thank alan auerbach tom davidoff caroline hoxby jus tin mccrary rob mcmillan john quigley cecilia rouse emmanuel saez till von wachter four anonymous refer ees editor robert moffitt seminar participants at several institutions and especially david card for helpful sugges tions i am grateful to the college board for essential data and to a national science foundation graduate research fellowship and the fisher center for real estate and urban economics at uc berkeley for funding see cecilia elena rouse 1998 julie b cullen et al 2005 william g howell et al 2002 and alan b krueger and pei zhu 2004 for analyses of several existing nonresidential choice programs though none focuses on the particular issue studied here this definition avoids the need to find observable de terminants of effectiveness which have proved elusive hanushek 1986 my definition however ignores a school s contribution to nontest outcomes e g sports or music if such outcomes motivate parental choices i will conclude that parents do not demand effective schools of

endogenous participation in charity auctions abstract data from a recent field experiment suggests that differences in participation rates are responsible for much of the variations in charity auction revenues across formats we provide a theoretical framework for the analysis of this and other related results the model illustrates the limits of previous results that assume full participation and introduces some new considerations to the choice of auction mechanism it also implies however that the data cannot be explained in terms of participation costs alone there must exist mechanism specific obstacles to participation

banks financial liberalisation and financial crises in emerging markets the east asian financial crisis has raised a series of important issues amongst them is the question of the role of the banking sector and financial liberalisation in contributing to financial crises how do weaknesses in the domestic banking sector when combined with both domestic and international financial liberalisation engender currency crises what is lacking in the literature is a simple conceptual framework within which these connections can be conceptualised and drawn out and in which the role of banks is explicitly discussed this paper seeks to provide just such a framework within it international financial liberalisation can be seen as fuelling a boom in domestic credit which leads to acute balance sheet problems for domestic banks and exposes the country concerned to a currency crisis in the event of a sudden reversal of capital inflows which banking weaknesses may itself trigger

how not to raise money we show that standard winner pay auctions are inept fund raising mechanisms because of the positive externality bidders forgo if they top another s high bid revenues are suppressed as a result and remain finite even when bidders value a dollar donated the same as a dollar kept this problem does not occur in lotteries and all pay auctions where bidders pay irrespective of whether they win we introduce a general class of all pay auctions rank their revenues and illustrate how they dominate lotteries and winner pay formats the optimal fund raising mechanism is an all pay auction augmented with an entry fee and reserve price

the location of international financial activity an interregional analysis goldberg m a helsley r w and levi m d 1989 the location of international financial activity an interregional analysis reg studies 23 1 7 this paper examines the determinants of the spatial distribution of financial activity the determinants of the sizes of the financial services sector are estimated using data for a sample of us states although our analysis is limited by the availability of data the results are strong and clear the level of international financial activity is positively and significantly related to per capita income the level of imports and the number of corporate headquarters the results indicate that international trade is intensive in its use of financial services and that financial services tends to be exported along with goods goldberg m a helsley r w et levi m d 1989 la localisation des operations financieres internationales une analyse interregionale reg studies 23 1 7 cet article examine les determinants de la distribution geographique des opera

branching scale economies and banking costs abstract in this paper we develop and estimate a model of bank costs based on a theory of the branch cost function first we show that convenient branch location is important to banking customers and implies that banks do not necessarily operate branches at minimum average cost this theoretical result provides a rationale for including branch variables in the bank cost function second we estimate a statistical cost equation derived explicitly from assumptions about the branch cost function and including branch output variables our empirical results suggest substantial economies of scale at the branch level but no economies from expansion by branching finally we show that the resulting cost structure of the banking industry does not imply that a highly concentrated banking structure is necessary for efficiency thus economies of scale would not be expected to force small banks out of the market even if current restrictions on interstate banking are liberalized

auctions with price proportional benefits to bidders after some auctions including amish estate sales and buyer rings knockout auctions each bidder receives a share of the revenue generated by the auction we show that in the symmetric case equilibrium bids in both first price sealed bid auctions and oral auctions increase as each bidder s share increases in the case of independent signals oral auctions result in higher expected equilibrium prices than do first price sealed bid auctions journal of economic literature classification number d44

the structure of international banking abstract this paper investigates the factors that determine the number and form of foreign banking operations from 60 foreign countries in the united states our equilibrium model of three banking forms representative offices agencies and branches and three explanatory variables export activity merchant banking activity and capital market development explains more than 74 per cent of the variation in numbers of offices across the 60 different foreign countries in addition we identify the equilibrium model of competition among the types of operations that is most consistent with the empirical results jel f33

private information and altruism in bidding roscas this article studies how altruism improves allocations in a private information environment where strategic behaviour reduces economic welfare a theoretical analysis establishes that in an environment characterised by uncertainty and private information outcomes of auctions in rotating savings and credit associations roscas are more efficient when bidders preferences are altruistic rather than selfish a semi parametric structural estimation technique for rosca auctions is presented a parametric structural estimation identifies interactions between group characteristics and bidder altruism it is found that effective leadership and intra group diversity are associated with a greater extent of bidder altruism and thus more efficient intra rosca allocations

the efficiency effects of a single market for financial services in europe abstract this paper examines the potential efficiency effects of a single market for financial services in europe the topics covered include universal banking the merger and acquisition process itself cross border ownership and management of financial institutions and the effects of consolidation of financial institutions on the supply of relationship lending services to informationally opaque small businesses the research reviewed here suggests that the creation of a single market for the european financial services industry is not likely to bring about strong efficiency gains and that cross border efficiency barriers may prevent the single market from becoming a reality

silent auctions in the field and in the laboratory we analyze data from hundreds of auctions from three field silent auction sessions we focus on the descriptive statistics and on a parametric model of jump bidding we then report data from six laboratory sessions of silent auctions as a controlled environment this allows us to evaluate the auctions in ways not available within the field the laboratory experiments capture essential features of the field sessions and thus comprise a credible laboratory testbed for further examination of institutional perturbations in the silent auction jel d44 h41

charitable motives and bidding in charity auctions research on bidding in auctions has generally relied on the assumption of self interested bidders this work relaxes that assumption in the context of charity auctions because understanding charitable motives has important implications for auction design and charities fundraising strategies this study investigates bidders specific types of charitable motives and the strength of these motives we carry out three controlled field experiments consisting of real life auctions conducted on a local internet auction site we use a novel design in which we simultaneously run charity and noncharity auctions for identical products and vary the percentage donated to charity results show that auctions with proceeds donated to charity lead to significantly higher selling prices a result due to a higher bidding by bidders with charitable motives rather than to increased bidder entry we also find that increased prices only occur when the charitable donation is a percentage of the auction revenue and that a fixed charitable donation associated with each auction has no effect on prices furthermore we find that prices are increasing in the percentage donated to charity we find considerable support for a model of voluntary shill like bidding where charitable bidders try to increase proceeds in charity auctions we also find that auctions with 25 of revenue donated to charity had higher net revenue than noncharity auctions hence companies may be able to use charity auctions as part of a corporate social responsibility strategy and at the same time increase profitability even though they donate part of the proceeds to charity

the determinants of us banking activity abroad abstract the banking industry provides an excellent example of the internationalization of world business and economic interdependencies across countries analysis of the past growth of international banking operations can also prove useful to banks interested in augmenting their current business or expanding their international coverage and to banks who anticipated future competition in their markets from new or strengthened foreign competitors this study provides the most comprehensive examination of the development of us bank branches in other countries is presented and tested in order to facilitate the understanding of the expansion of international banking

rotating savings and credit associations when participants are risk averse we model rotating savings and credit associations roscas among risk averse participants who experience privately observed income shocks a random rosca is not advantageous whereas a bidding rosca is if temporal risk aversion is less pronounced than static risk aversion the payoff scheme of a bidding rosca facilitates risk sharing in the presence of information asymmetries the risk sharing performance of a simple arrangement where a group of homogenous individuals runs several bidding roscas simultaneously is as good as that of a linear risk sharing contract and is more enforceable because it carries a fixed rather than a variable contribution

international trade in banking services abstract this paper investigates which of the theories of international trade best explains trade in international banking in its various forms branches subsidiaries and representatives strong evidence is found to support the newer economies of scale theories and it is proposed that the foreign exchange and capital markets exhibit declining costs to production it is also discovered that the relaxation of exchange and capital controls by potential host countries diminishes the incentives of banks to seek direct representation

erratumauction guarantees for works of art this paper addresses the question of whether auction guarantees change the bidding environment and whether they cause a change in price once the value of an item is taken into account we analyze both the cases of third party guarantees and in house guarantees we use two datasets one of christie s and sotheby s contemporary and impressionist evening sales from january 2010 to february 2012 and another larger dataset consisting of all items auctioned at christie s from 2001 to may 2011 while more expensive items are more likely to have guarantees we find little empirical evidence to suggest an effect on price from the guarantee itself once the value of the item is taken into account