position auctions with consumer search this paper examines a model in which advertisers bid for sponsored link positions on a search engine the value advertisers derive from each position is endogenized as coming from sales to a population of consumers who make rational inferences about rm qualities and search optimally consumer search strategies equilibrium bidding and the welfare benets of position auctions are analyzed implications for reserve prices and a number of other auction design questions are discussed

endogenous future preferences and conservation a dynamic optimization model is developed in whichuncertainty about future preferences is endogenous namely depending on the state of the environment atthe time the change in preferences occurs endogeneizing preferences not only provides economicintuition to previous results but also implies thatoptimal policies are less conservative

internet advertising and the generalized second price auction selling billions of dollars worth of keywords we investigate the generalized second price gsp auction a new mechanism used by search engines to sell online advertising although gsp looks similar to the vickrey clarke groves vcg mechanism its properties are very different unlike the vcg mechanism gsp generally does not have an equilibrium in dominant strategies and truth telling is not an equilibrium of gsp to analyze the properties of gsp we describe the generalized english auction that corresponds to gsp and show that it has a unique equilibrium this is an ex post equilibrium with the same payoffs to all players as the dominant strategy equilibrium of vcg

the development of urban labour markets china s urban wage curve 1980 92 this study explores the effect of china s economic reforms and growth on a critical outcome of labour market interactions wage levels provincial data from 1980 to 1992 are used to analyse changes in interregional wage differentiation and the relationship between average and real wages and a variety of economic variables the results illuminate the increasing role of market forces particularly labour demand variables such as economic growth and foreign investment in determining wage levels and explaining the pattern of first declining and then sharply rising interregional wage differentials in the 1980s and early 1990s at the same time the empirical results highlight the persistence of barriers to labour mobility across regions and enterprises of different ownership types these findings suggest that the evolution of china s urban labour market to date is marked by a combination of unprecedented flexibility as well as old and new forms of rigidity

analyzing the relationship between organic and sponsored search advertising positive negative or zero interdependence the phenomenon of paid search advertising has now become the most predominant form of online advertising in the marketing world however we have little understanding of the impact of search engine advertising on consumers responses in the presence of organic listings of the same firms in this paper we model and estimate the interrelationship between organic search listings and paid search advertisements we use a unique panel data set based on aggregate consumer response to several hundred keywords over a three month period collected from a major nationwide retailer store chain that advertises on google in particular we focus on understanding whether the presence of organic listings on a search engine is associated with a positive a negative or no effect on the click through rates of paid search advertisements and vice versa for a given firm we first build an integrated model to estimate the relationship between different metrics such as search volume click through rates conversion rates cost per click and keyword ranks a hierarchical bayesian modeling framework is used and the model is estimated using markov chain monte carlo methods our empirical findings suggest that click throughs on organic listings have a positive interdependence with click throughs on paid listings and vice versa we also find that this positive interdependence is asymmetric such that the impact of organic clicks on increases in utility from paid clicks is 3 5 times stronger than the impact of paid clicks on increases in utility from organic clicks using counterfactual experiments we show that on an average this positive interdependence leads to an increase in expected profits for the firm ranging from 4 2 to 6 15 when compared to profits in the absence of this interdependence to further validate our empirical results we also conduct and present the results from a controlled field experiment this experiment shows that total click through rates conversions rates and revenues in the presence of both paid and organic search listings are significantly higher than those in the absence of paid search advertisements the results predicted by the econometric model are also corroborated in this field experiment which suggests a causal interpretation to the positive interdependence between paid and organic search listings given the increased spending on search engine based advertising our analysis provides critical insights to managers in both traditional and internet firms

real wages over the business cycle evidence from panel data one topic on which keynes did not disagree with classical economists was the cyclical behavior of real wages keynes 1936 as well as various classical writers predicted that real wages should move countercyclically quoting the general theory p 17 in general an increase in employment can only occur through the accompaniment of a decline in real wages thus i am not disputing this vital fact which the classical economists have rightly asserted as indefeasible this prediction is based on the premise of competition and a given short run capital stock increases in employment then correspond to more intensive use of capital and through diminishing product lower real wages for this reason evidence by dunlop 1938 and tarshis 1939 that real wages move procyclically was viewed as paradoxical both dunlop and tarshis based their findings on an observed positive correlation between real and money wages which given the procyclical movement of money wages implies a positive correlation between

business cycle models aggregation and real wage cyclicality a substantial literature has developed to estimate the true cyclicality of real wages that is composition bias free two major issues are addressed in this article aggregation of heterogeneous workers and potential bias in the measurement of the labor input a general analysis of the biases is presented and alternative approaches in the literature are nested in a single framework estimates based on an efficiency units concept that avoids the usual aggregation problems are presented composition bias underestimates the usual parameters of interest unless both the price and the quantity of the labor input are adjusted appropriately

wage flexibility in the chinese labour market 1989 2009 abstractwage flexibility in the chinese labour market 1989 2009 regional studies china s bureaucratic wage determination system is gradually being replaced by a market based system leading to a novel version of a dual labour market this paper studies wage flexibility in this dual market its principal findings are as follows wages in both sectors have become less responsive to changes in official registered unemployment with an alternative market based measure of unemployment becoming more relevant there is evidence of convergence of flexibility between the two sectors the wages of women exhibit greater flexibility than those of men and there is evidence of differences in wage flexibility between workers who have urban residential rights and rural migrants

a position paradox in sponsored search auctions we study the bidding strategies of vertically differentiated firms that bid for sponsored search advertisement positions for a keyword at a search engine we explicitly model how consumers navigate and click on sponsored links based on their knowledge and beliefs about firm qualities our model yields several interesting insights a main counterintuitive result we focus on is the position paradox the paradox is that a superior firm may bid lower than an inferior firm and obtain a position below it yet it still obtains more clicks than the inferior firm under a pay per impression mechanism the inferior firm wants to be at the top where more consumers click on its link whereas the superior firm is better off by placing its link at a lower position because it pays a smaller advertising fee but some consumers will still reach it in search of the higher quality firm under a pay per click mechanism the inferior firm has an even stronger incentive to be at the top because now it only has to pay for the consumers who do not know the firms reputations and therefore can bid more aggressively interestingly as the quality premium for the superior firm increases and or if more consumers know the identity of the superior firm the incentive for the inferior firm to be at the top may increase contrary to conventional belief we find that the search engine may have the incentive to overweight the inferior firm s bid and strategically create the position paradox to increase overall clicks by consumers to validate our model we analyze a data set from a popular korean search engine firm and find that i a large proportion of auction outcomes in the data show the position paradox and ii sharp predictions from our model are validated in the data

reform without losers an interpretation of china s dual track approach to transition this paper develops a simple model to analyze the dual track approach to market liberalization as a mechanism for implementing efficient pareto improving economic reform that is reform achieving efficiency without creating losers the approach based on the continued enforcement of the existing plan while simultaneously liberalizing the market can be understood as a method for making implicit lump sum transfers to compensate potential losers of the reform the model highlights the critical roles of enforcement of the plan for achieving pareto improvement and full liberalization of the market track for achieving efficiency we examine how the dual track approach has worked in product and labor market liberalization in china

position effects in search advertising and their moderators a regression discontinuity approach we investigate the causal effect of position in search engine advertising listings on outcomes such as click through rates and sales orders because positions are determined through an auction there are significant selection issues in measuring position effects a simple mean comparison of outcomes at two positions is likely to be biased due to these selection issues additionally experimentation is rendered difficult in this situation by competitors bidding behavior which induces selection biases that cannot be eliminated by randomizing the bids for the focal advertiser econometric approaches to address the selection are rendered infeasible due to the difficulty of finding suitable instruments in this context we show that a regression discontinuity rd approach is feasible to measure causal effects in this important context we apply the approach to a large and unique data set of daily observations containing information on a focal advertiser as well as its major competitors our rd estimates demonstrate that there are significant selection biases in the more naive estimates while a mean comparison of outcomes across positions would indicate very large position effects we find that our rd estimates of these effects are much smaller and exist only in some of the positions we further investigate moderators of these effects position effects are stronger when the advertiser is smaller and when the consumer has low prior experience with the keyword for the advertiser they are weaker when the keyword phrase has specific brand or product information when the ad copy is more specific as in exact matching options and on weekends compared to weekdays

wage flexibility in regional labour markets evidence from italy and germany ammermuller a lucifora c origo f and zwick t wage flexibility in regional labour markets evidence from italy and germany regional studies this paper investigates the functioning of regional labour markets in italy and germany for different employee groups and regions it derives theoretical hypotheses on group specific correlations between regional unemployment and individual wages distinguishing between regions using micro data matched to local unemployment rates wage equations are specified and empirically tested for italy no evidence is found in favour of a relationship between wages and local unemployment in germany results appear to be sensitive to model specification and type of employees in both countries the reaction of wages to local unemployment varies significantly along the wage distribution being more sensitive around median quantiles ammermuller a lucifora c origo f et zwick t la flexibilite des salaires dans les marches du travail regionaux des preuves provenant de

permanent versus interim regulations a game theoretic analysis abstract when a regulator anticipates learning about the benefits or costs of regulations over time questions can be raised about the appropriate regulatory policy this paper compares permanent and interim regulations in a setting with initially uncertain pollution damages a fixed capital input and costly enforcement the analysis shows that neither policy is first best conditions under which one policy dominates the other are identified with the help of a simulation the results indicate that permanent regulations may be preferable to interim regulations even when there is substantial uncertainty about damages

the wage curve a review in the wage qurve david g blancflower and andrew j oswald argue that there is a fundamental negative relation between wages and the unemployment rate in a worker s local labor market blancflower and oswald use large scale micro data sets to estimate this relation for the united states britain and 10 other countries i review their empirical methods and findings and provide some further evidence on the nature of the wage curve relationship in the united states i conclude that there is a strong statistical correlation between rates of pay and local unemployment although the interpretation of this correlation remains unresolved this abstract was borrowed from another version of this item

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

irreversible environmental investments with uncertain benefit levels abstract the principal property of irreversibilities is that they generate incentives for policies that are smaller in scale than a myopic policy the circumstances in which this irreversibility effect occurs are first considered for a model with unit benefit uncertainty and time invariant cost functions with changes in cost relationships over time such as fixed costs for augmenting investment it may be desirable to adopt policies with scales that are larger than smaller than or the same as the scale of a myopic policy with rising unit benefits over time one adopts a policy scale larger than or the same as that in the myopic case and with declining unit benefits the opposite result holds irreversibilities will however lead to underinvestments in comparison with incompletely reversible investments with similar adjustment costs for increasing policy investments

cooperation harassment and involuntary unemployment an insider outsider approach the authors present a theory of involuntary unemployment which explains why the unemployed workers outsiders are unable or unwilling to find jobs even though they are prepared to work for less than the prevailing wages of incumbent workers in siders the outsiders do not underbid the insiders since were the y to do so the insiders would withdraw cooperation from them making their work unpleasant with harassment and thereby reducing the prod uctivity and increasing the reservation wages of the underbidders th e resulting labor turnover costs create economic rent which the insid ers tap in wage setting and as a result involuntary unemployment ma y arise copyright 1988 by american economic association

real wage cyclicality of job stayers within company job movers and between company job movers using the british new earnings survey panel data nespd for the period 1975 to 2001 we estimate the wage cyclicality of job stayers those remaining within single jobs in a given company within company job movers and between company job movers we also examine how the proportion of internal and external job moves varies over the business cycle we find that the wages of internal movers are slightly more procyclical and wages of external movers considerably more procyclical than those of stayers notwithstanding a decomposition shows that in britain wage cyclicality arises almost entirely from the procyclicality of wages for job stayers with across and within firm mobility playing a lesser role thus there is little evidence for rigid wage models that imply that employers use changes in job titles as a means of adjusting wages to the business cycle we also show that the distinctions between private and public sectors and between workers covered and uncovered by collective agreements have important impacts on the wage estimates of both stayers and movers

the cyclicality of real wages within employer employee matches using data from the panel study of income dynamics the author examines the cyclicality of wages within employer employee matches for the years 1970 91 recent research on wage cyclicality has suggested that wages are very procyclical tending to rise and fall with economic upturns and downturns even for workers who remain with the same employer the author finds however that the evidence for wage procyclicality within the matches he examines is rather weak except for the small group of workers who were paid by piece rate or commissions despite having acyclical wage rates men who were paid hourly had earnings movements that were very procyclical salaries exhibited little cyclicality but salaried workers who had income sources from bonuses commissions or overtime had procyclical earnings the results suggest that the increasing prevalence of incentive based pay will increase the procyclicality of wages within matches

paying for prominence we investigate three ways in which firms can become prominent and thereby influence the order in which consumers consider options first firms can affect an intermediary s sales efforts by means of commission payments when firms pay commission to a salesman the salesman promotes the product with the highest commission and steers ignorant consumers towards the more expensive product second sellers can advertise prices on a price comparison website so that consumers investigate the suitability of products in order of increasing price in such a market equilibrium prices are lower when search costs are higher since a firm s benefit from being investigated first increases with search costs finally consumers might first consider their existing supplier when they purchase a new product which suggests a relatively benign rationale for the prevalence of cross selling in markets such as retail banking

environmental policy choice with an uncertain chance of irreversibility abstract an uncertain chance of irreversibility leads to lower levels of investment than in the reversible case if there is downward irreversibility higher levels of investment if there is upward irreversibility and a possible effect in either direction in the case of complete irreversibility in all of these situations there will be an effect on initial policy investments whenever there is a nonzero probability that the irreversibility constraint is binding the policy design is based on equating initial marginal costs to conditional marginal benefits over the states in which the initial policy scale decision will be the policy choice the maximum attainable policy value is convex with respect to the probability of irreversibility

measuring wage flexibility the case of turkey before and after structural adjustment this article presents an empirical analysis of wage flexibility in the formal private sector in turkey the analysis is based on a wage bargaining model that links the nominal wage demands to labour market conditions which are proxied by the rate of unemployment productivity improvements and price expectations the model is estimated on the basis of panel data of the formal private manufacturing industry and changes in the wage setting mechanism as the country shifts from an import substituting industrialization strategy to an export oriented growth regime are discussed this debate is particularly important in terms of its policy implications and is relevant to current international discussions of the role of labour markets during structural adjustment in most economic policy discussions unemployment is assumed to be a labour market rigidity problem the results of this article however suggest that increased flexibility of wages leaves little room for such arguments in the light of these findings the prospect of wage rigidity becomes immaterial and a focus on the structural problems of the economy which are outside the labour market becomes central

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

the german wage curve evidence from the iab employment sample abstract this paper examines the german wage curve using the institut fur arbeitsmarkt und berufsforschung iab employment sample over the period 1981 1990 a random sample of 6590 employees covering 142 labor market regions over a ten year period is considered the total number of observations is 40 852 taking into account the endogeneity of unemployment as well as controlling for region and time effects this paper finds support for the wage curve in germany the overall unemployment elasticity estimate is 0 07 and is higher for younger workers than older workers the wages of less qualified workers are more responsive to local unemployment rates than the wages of more qualified workers also the wages of men are slightly more responsive to local unemployment rates than the wages of women ignoring endogeneity of the local unemployment rate yields results in favor of the wage curve only for younger and less qualified workers accounting for endogeneity of the unemployment rate yields evidence in favor of the wage curve across all types of workers

how psychological should economic and marketing models be abstract the authors discuss the potential of making the recently developed behavioral economics models even more psychological by 1 increasing their context specificity 2 allowing different people to have different model parameters and 3 capturing the underlying psychological processes more explicitly they show that some of these models already make room for understanding context specificity and heterogeneity and they discuss new ways to enrich the models along those two dimensions the task of adding process details is more challenging in simple mathematical forms because these models must serve as building blocks for aggregate market models

keyword search advertising and first page bid estimates a strategic analysis in using the generalized second price gsp auction to sell advertising slots a search engine faces several challenges advertisers do not truthfully bid their valuations and the valuations are uncertain furthermore advertisers are budget constrained in this paper we analyze a stylized model of the first page bid estimate fpbe mechanism first developed by google and demonstrate its advantages in dealing with these challenges we show why and when the fpbe mechanism yields higher profits for the search engine compared with the traditional gsp auction and the gsp auction with advertiser specific minimum bid in the event that a high valuation advertiser is budget constrained the search engine can use the fpbe mechanism to alter the listing order with the intent of keeping the high valuation advertiser in the auction for a longer time the resulting increase in the search engine s profits is not necessarily at the expense of the advertisers because the combined profits of the advertisers and the search engine increase this paper was accepted by j miguel villas boas marketing