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

auctions of heterogeneous objects abstract simultaneous sealed bid auctions of heterogeneous objects are analyzed each bidder s reservation value for an object depends upon the other objects he obtains bidders reservation values are common knowledge in simultaneous first price auctions the set of walrasian equilibrium allocations contains the set of pure strategy nash equilibrium allocations which in turn contains the set of strict walrasian equilibrium allocations hence pure strategy nash equilibria when they exist are efficient mixed strategy nash equilibria may be inefficient in simultaneous second price auctions any efficient allocation can be implemented as a pure strategy nash equilibrium outcome if a walrasian equilibrium exists journal of economic literature classification numbers d44 d51

truthfulness with value maximizing bidders on the limits of approximation in combinatorial markets abstract in some markets bidders want to maximize value subject to a budget constraint rather than payoff this is different to the quasilinear utility functions typically assumed in auction theory and leads to different strategies and outcomes we refer to bidders who maximize value as value bidders while simple single object auction formats are truthful standard multi object auction formats allow for manipulation it is straightforward to show that there cannot be a truthful and revenue maximizing deterministic auction mechanism with value bidders and general valuations approximation has been used as remedy to achieve truthfulness on other mechanism design problems and we study which approximation ratios we can get from truthful mechanisms we show that the approximation ratio that can be achieved with a deterministic and truthful approximation mechanism with n bidders cannot be higher than 1 n for general valuations for randomized approximation mechanisms there is a framework with a ratio that is tight

a model of product line design and introduction sequence with reservation utility abstract cannibalization is a major concern for a firm when designing a product line in addition external options from outside the firm s product line may also play a significant role in this paper we investigate the impact of external options represented by reservation utility on product line design and introduction sequence we find that a heterogeneous reservation utility defines the relative attractiveness of segments and corresponding product line b reservation utility makes it more favorable to introduce products sequentially rather than simultaneously c aggregating segments is an effective way to mitigate cannibalization when it becomes too difficult to manage with different values of reservation utility across multiple segments and d introducing products in a non monotone order of quality can improve profit from simultaneous introduction when the value of reservation utility of a middle segment is particularly high

a dynamic auction for differentiated items under price rigidities a number of heterogeneous items are to be sold to several bidders each bidder demands at most one item the price of each item is not completely flexible and is restricted to some admissible interval in such a market economy with price rigidities a walrasian equilibrium usually fails to exist to facilitate the allocation of items to the bidders we propose an ascending auction with rationing that yields a constrained walrasian equilibrium outcome the auctioneer starts with the lower bound price vector that specifies the lowest admissible price for each item and each bidder responds with a set of items demanded at those prices the auctioneer adjusts prices upwards for a minimal set of over demanded items and chooses randomly a winning bidder for any item if the item is demanded by several bidders and its price has reached its highest admissible price we prove that the auction finds a constrained walrasian equilibrium outcome in a finite number of steps

on minimal ascending auctions with payment discounts the literature on ascending combinatorial auctions yields conflicting insights regarding the possibility to implement the vickrey payoffs for general valuations we introduce the class of minimal ascending auctions a class which allows one to disconnect the final payments from the final bids but which prohibits the raising of the price vector of a provisionally winning bidder we first establish the impossibility of implementing the vickrey payoffs for general valuations second we propose a minimal ascending auction that yields a bidder optimal competitive equilibrium thanks to payment discounts

using first price auctions to sell heterogeneous licenses abstract this paper considers three alternative ways to sell heterogeneous licenses via a first price format when there is single unit demand it has been suggested that incorporating a first price element may bolster competition in this case klemperer paul d 2002 what really matters in auction design journal of economic perspectives 16 169 189 in a controlled laboratory setting we compare the performance of the simultaneous first price auction the sequential first price auction and the simultaneous descending auction with that of the simultaneous ascending auction the experiments involve several bidding environments of varying complexity we find that the simultaneous ascending auction achieves the highest levels of efficiency but also has drawbacks i its revenues are low and variable ii per license profits vary and iii the incidence of winner s curse outcomes is high seller s revenues are highest when the licenses are sold in a sequential first price auction in decreasing order of quality

comparative statics in matching markets abstract this paper studies the comparative statics of adding agents to matching markets that generalize the marriage and college admissions markets of d gale and l shapley amer math monthly 69 1962 9 15 it is shown for the wide class of matching markets studied by a roth econometrica 52 1984 47 57 that adding an agent to one side of the market weakens the competitive positions of the other agents on that side and strengthens the competitive positions of the agents on the other side

the strategy structure of some coalition formation games in coalitional games with side payments the core predicts which coalitions form and how benefits are shared the predictions however run into difficulties if the core is empty or if some coalitions benefit from not blocking truthfully these difficulties are analyzed in games in which an a priori given collection of coalitions can form as the collection of pairs of buyer seller in an assignment game the incentive properties of the core and of its selections are investigated in function of the collection furthermore the relationships with vickrey clarke groves mechanisms are drawn

vickrey dutch procurement auction for multiple items we consider a setting where there is a manufacturer who wants to procure multiple items from a set of suppliers each of whom can supply one or more of these items bundles we design an ascending price auction for such a setting which implements the vickrey clarke groves outcome and truthful bidding is an ex post nash equilibrium our auction maintains non linear and non anonymous prices throughout the auction this auction has a simple price adjustment step and is easy to implement in practice as offshoots of this auction we also suggest other simple auctions in which truthful bidding is not an equilibrium by suppliers which may be suitable where incentives to suppliers are not a big concern computer simulations of our auction show that it is scalable for the multi unit case and has better information revelation properties than its descending auction counterpart

ascending price vickrey auctions abstract we show that an ascending price auction for multiple units of a homogeneous object proposed by ausubel i raises prices for packages until they reach those nonlinear and non anonymous market clearing prices at which bidders get their marginal products and ii the auction is a primal dual algorithm applied to an appropriate linear programming formulation in which the dual solution yields those same market clearing prices we emphasize the similarities with efficient incentive compatible ascending price auctions to implement vickrey payments when there is a single object or when objects are heterogeneous but each buyer does not desire more than one unit a potential benefit of these common threads is that it helps to establish the principles upon which vickrey payments may be implemented through decentralized incentive compatible procedures

transferring ownership of public housing to existing tenants a market design approach this paper explores a housing market with an existing tenant in each house and where the existing tenants initially rent their houses the idea is to identify equilibrium prices for the housing market given the prerequisite that a tenant can buy any house on the housing market including the one that he is currently possessing or continue renting the house he is currently occupying the main contribution is the identification of an individually rational equilibrium selecting and group non manipulable price mechanism in a restricted preference domain that contains almost all preference profiles in this restricted domain the identified mechanism is the minimum price equilibrium selecting mechanism that transfers the maximum number of ownerships to the existing tenants we also relate the theoretical model and the main findings to the u k housing act 1980 whose main objective is to transfer ownerships of houses to existing tenants

joint bidding in the name your own price channel a strategic analysis in this paper we study the name your own price nyop channel we examine theoretically and empirically whether asking consumers to place a joint bid for multiple items rather than bid one item at a time as practiced today can increase nyop retailers profits relatedly we also examine whether allowing consumers to self select whether to place a joint bid or itemwise bids increases retailers profits and consumers surplus we construct a dynamic model that incorporates both demand uncertainty and supply uncertainty to address these issues our theoretical analysis identifies the conditions under which joint bidding can increase both nyop retailers profits and consumers surplus we find that some consumers might bid more for the very same items when they place joint bids the increase in bid amount is related to the fact that joint bidding reduces the chance of mismatch between nyop retailers costs and consumer bids we conducted a laboratory study to assess the descriptive validity of some of the

full line or specialization strategy the negative effect of product variety on product line strategy abstract this paper studies the product line decisions of firms under two consumer segments differing in their quality sensitivity we focus on a negative impact of the product variety on the consumers motivation to purchase while each product is horizontally differentiated in the presence of this impact and high fixed costs relative to variable costs it is shown that when a highly quality sensitive segment exists it is always advantageous for the monopoly to specialize in only one product serving this segment however the appearance of a competitor can drastically change the product line in the market under the duopolistic setting where two firms sequentially determine their product lines we show that the leader gains a better financial result by offering its product to the low segment for many cases including the case where no product is offered to the high segment by either of the firms who are in equilibrium furthermore we obtain another interesting result that indicates that the follower s profit can exceed the leader s profit when the quality sensitivities between the two consumer segments are sufficiently different even though the two firms are symmetric except for the order of their product offerings

bargaining and efficiency in networks abstract we study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus players who reach agreement are removed from the network without replacement the global logic of efficient matchings and the local nature of bargaining in combination with the irreversible exit of player pairs following agreements create severe hurdles to the attainment of efficiency in equilibrium for many networks all markov perfect equilibria of the bargaining game are inefficient even as players become patient we investigate how incentives need to be structured in order to achieve efficiency via subgame perfect but non markovian equilibria the analysis extends to an alternative model in which individual players are selected according to some probability distribution and a chosen player can select a neighbor with whom to bargain

on ascending vickrey auctions for heterogeneous objects abstract we construct an ascending auction for heterogeneous objects by applying a primal dual algorithm to a linear program that represents the efficient allocation problem for this setting the auction assigns personalized prices to bundles and asks bidders to report their preferred bundles in each round a bidder s prices are increased when he belongs to a minimally undersupplied set of bidders this concept generalizes the notion of overdemanded sets of objects introduced by demange gale and sotomayor for the one to one assignment problem under a submodularity condition the auction implements the vickrey clarke groves outcome we show that this type of condition is somewhat necessary to do so when classifying the ascending auction literature in terms of their underlying algorithms our auction fills a gap in that literature we relate our results to various ascending auctions in the literature

sequential rules for house allocation with price restrictions this paper considers a housing market with price restrictions on such markets the existence of a unique minimum rationing equilibrium price vector has been established for each preference profile on a general preference domain that contains almost all preference profiles this vector can be used as a key ingredient in a direct and strategy proof allocation mechanism the main contribution of this paper is to provide two price sequences one with increasing prices and one with decreasing prices that both terminate to a minimal rationing equilibrium price vector in a finite number of steps these sequences are demonstrated to play key roles in an english auction and a dutch auction respectively for the considered housing market with price restrictions less

an economic perspective on auctions the recent spectrum auctions in europe have shown that serious problems can wise in auctions where multiple complementary objects are being sold such as blocks of radio spectrum that will subsequently be used by the wining bidders to compete against each other in downstream markets other important instances of such situations include take off and landing slots at airports and rights for electricity and gas transmission t i first review some of the theory describing multi object auctions i i next outline the importance of strategic effects arising in auctions that are followed by competition between the bidders and the tension arising between various goals such as efficiency and revenue maximization although more flexible auction formats can have virtues particularly in taking into account complementarities they can also be manipulated by bidders to build market power to the detriment of consumers we next apply these insights to the recent european umts licence auctions finally we draw the main conclusions and policy implications

random decentralized market processes for stable job matchings with competitive salaries abstract we analyze a decentralized process in a basic labor market where finitely many heterogeneous firms and workers meet directly and randomly in pursuit of higher payoffs over time and agents may behave myopically we find a general random decentralized market process that almost surely converges in finite time to a competitive equilibrium of the market a key proposition en route to this result exhibits a finite sequence of successive bilateral trades from an arbitrary initial market state to a stable matching between firms and workers with a scheme of competitive salary offers

competitive equilibrium in an exchange economy with indivisibilities abstract we analyze an exchange economy in which i all commodities except money are indivisible ii agents preferences can be described by a reservation value for each bundle of indivisible objects and iii all agents are price takers we obtain a necessary and sufficient condition under which market clearing prices exist implications for market mechanisms are discussed journal of economic literatureclassification numbers d51 c78

trading networks with price setting agents abstract in a wide range of markets individual buyers and sellers trade through intermediaries who determine prices via strategic considerations typically not all buyers and sellers have access to the same intermediaries and they trade at correspondingly different prices that reflect their relative amounts of power in the market we model this phenomenon using a game in which buyers sellers and traders engage in trade on a graph that represents the access each buyer and seller has to the traders we show that the resulting game always has a subgame perfect nash equilibrium and that all equilibria lead to an efficient allocation of goods finally we analyze trader profits in terms of the graph structure roughly a trader can command a positive profit if and only if it has an essential connection in the network thus providing a graph theoretic basis for quantifying the amount of competition among traders

the effects of sensitization and habituation in durable goods markets abstract we develop a model to study the impact of changes in price sensitivity on the firm as it introduces multiple generations of a durable product where unit costs are a convex function of quality we incorporate the psychological processes of sensitization and habituation into a model of discretionary purchasing of replacement products motivated by past experience when price sensitivity decreases with each purchase sensitization the myopic firm offers a higher quality product at a much higher price with each generation when price sensitivity increases with each purchase habituation the myopic firm engages in price skimming when sensitization is followed by habituation the myopic firm eventually provides higher quality than the market is willing to pay for leading to a steep drop off in sales and profits the actions of the forward looking firm depend on the discount rate a firm with a low discount rate builds its customer base before offering a higher quality and higher priced product in contrast a firm with a high discount rate quickly increases price and quality following the same path to falling profits of the myopic firm these results provide insight into the firm and consumer behaviors underlying the phenomenon of performance oversupply identified in the innovation literature

commonality decisions when designing for multiple markets abstract it is well established that a manufacturer s commonality decisions between related products are driven by trade offs between cost savings from standardization and demand effects of customization prior research has examined these trade offs in the context of product line design for a single geography where cannibalization is a primary concern however the insights from a single market may not readily apply when serving related products for different geographies where cannibalization ceases to be a concern the downside of commonality for geographically separated markets arises from a mismatch in customer preferences which results in disutilities in this paper we model the trade off between the consumer side disutilities and the cost side scale economies in the presence of demand uncertainty and derive the optimal extent of commonality between products for both the markets in the context of two product development strategies i primary market centric design pmd and ii design for multiple markets dfm our insights from analytical and numerical analysis show that when consumers are very picky and market uncertainty is low the dfm strategy outperforms the pmd strategy counter to the practice of introducing primary market centric products into emerging markets our study demonstrates the need for more customization especially in small but uncertain markets our research has important implications for automakers in integrating the diversity in tastes while making commonality decisions for multiple markets

a parametrization of the auction design space abstract we present an extensive breakdown of the auction design space that captures the essential similarities and differences of many auction mechanisms in a format more descriptive and useful than simple taxonomies this parametrization serves as an organizational framework in which to classify work within the field and uncovers parameter combinations corresponding to novel mechanisms the structured characterization of auction rules can be exploited for the modular design of configurable auction servers it also facilitates the communication of auction rules to software agents enabling the automation of flexible market based negotiation journal of economic literature classification numbers c70 d44

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

decentralized matching markets with endogenous salaries abstract in a shapley shubik assignment problem with a supermodular output matrix we consider games in which each firm makes a take it or leave it salary offer to one applicant and a match is made only when the offer is accepted by her we consider both one shot and multistage games in either game we show that there can be many equilibrium salary vectors which are higher or lower than the minimum competitive salary vector if we exclude artificial equilibria applicants equilibrium salary vectors are bounded above by the minimal competitive salary vector while firms equilibrium payoff vectors are bounded below by the payoff vector under the minimum competitive salary vector this suggests that adopting the minimum competitive salary vector as the equilibrium outcome in decentralized markets does not have a strong justification

an algorithm for identifying fair and optimal allocations the concept of a fair and optimal allocation was recently introduced by sun and yang sun n yang z 2003 a general strategy proof fair allocation mechanism economics letters 81 73 79 this note states some basic properties of fair and optimal allocations and provides a simple algorithm for identifying them c 2007 elsevier b v all fights reserved

approximation in mechanism design with interdependent values abstract this paper studies the revenue maximization problem in environments wherein buyers have interdependent values and correlated types we show that 1 when the system of feasible sets is a matroid and buyer valuations satisfy a single crossing condition the generalized vickrey clarke groves mechanisms with lazy reserves vcg l are ex post incentive compatible and ex post individually rational 2 if in addition the valuation distribution satisfies a generalized monotone hazard rate condition the vcg l mechanism with conditional monopoly reserves is approximately optimal then we construct an ascending auction that implements the truth telling equilibrium of a vcg l mechanism in ex post equilibrium finally we discuss the connection between the vcg l mechanisms and greedy algorithms studied in lehmann et al 2002 and deferred acceptance auctions studied in milgrom and segal 2014 and the impact of competition by proving a bulow and klemperer 1996 type result

mobility and affordability in us housing in the us affordability is changed by some housing policies that are set nationally and by others set locally since interventions tend to change rents and prices from market equilibrium levels they usually lower the volume of transactions hence mobility upon close examination however data from the 25 largest us cities do not support the negative association of mobility with intervention as strongly as do data comparing different countries with one another national intervention affects cities uniformly and local intervention while important is usually outweighed by other factors in the us what matter most are the economic fortunes of particular industries that spur the growth of some cities and hold back others the more households proliferate or migrate in the more will a city develop new neighbourhoods and generate chains of moves or turnover of the entire housing stock variations in growth rates thus dominate differences in the degree of intervention as spurs or blocks to mobility

an efficient dynamic auction for heterogeneous commodities this paper proposes a new dynamic design for auctioning multiple heterogeneous commodities generalizing earlier work that treated identical objects an auctioneer wishes to allocate one or more units of each of k heterogeneous commodities to n bidders the auctioneer announces a vector of current prices bidders report back quantities demanded at these prices and the auctioneer adjusts the prices units are credited to bidders at the current prices as their opponents demands decline and the process continues until every commodity market clears bidders rather than being required to behave as price takers are permitted to strategically exercise their market power nevertheless with pure private values the proposed auction yields walrasian equilibrium prices an efficient outcome results as from a vickrey clarke groves mechanism but bidders are only required to evaluate their demands along a one dimensional path of prices rather than reporting their utilities over the entire k dimensional consumption set the auction is also more transparent and potentially simpler for bidders to understand and has the advantage of assuring the privacy of the upper portions of bidders demands theoretically the new auction provides a new foundation for convergence to walrasian equilibrium in an exchange economy practically it provides an efficient method for simultaneously auctioning two or more related types of securities for example three month and six month treasury bills it is also potentially useful for auctioning multiple types of communications spectrum for example licenses for paired and unpaired spectrum

the effect of commonality on safety stock in a simple inventory model we examine the effects of component commonality on optimal safety stock levels in a two product two level inventory model the criterion is to minimize system safety stock subject to a service level constraint although our model is specialized its analysis provides insights not available in other multilevel inventory models

a competitive partnership formation process a group of heterogeneous agents may form partnerships in pairs all single agents as well as all partnerships generate values if two agents choose to cooperate they need to specify how to split their joint value among one another in equilibrium which may or may not exist no agents have incentives to break up any existing partnerships or form new partnerships this paper proposes a dynamic competitive adjustment process that always either finds an equilibrium or exclusively disproves the existence of any equilibrium in finitely many steps when an equilibrium exists partnership and revenue distribution will be automatically and endogenously determined by the process moreover several fundamental properties of the equilibrium solution and the model are derived

multi item vickrey english dutch auctions abstract assuming that bidders wish to acquire at most one item this paper defines a polynomial time multi item auction that locates the vcg prices in a finite number of iterations for any given starting prices this auction is called the vickrey english dutch auction and it contains the vickrey english auction sankaran j k 1994 on a dynamic auction mechanism for a bilateral assignment problem math soc sci 28 143 150 and the vickrey dutch auction mishra d parkes d 2009 multi item vickrey dutch auctions games econ behav 66 326 347 as special cases by means of numerical experiments it is showed that when the auctioneer knows the bidders value distributions the vickrey english dutch auction is weakly faster than the vickrey english auction and the vickrey dutch auction in 89 percent and 99 percent respectively of the investigated problems a greedy version of the vickrey english dutch auction is demonstrated to perform even better in the simulation studies

online ascending auctions for gradually expiring items abstract we consider dynamic auction mechanisms for the allocation of multiple items items are identical but have different expiration times and each item must be allocated before it expires buyers are of dynamic nature and arrive and depart over time our goal is to design mechanisms that maximize the social welfare we begin by showing that dominant strategy incentive compatibility cannot be used in this case since any such auction cannot obtain any constant fraction of the optimal social welfare we then design two auctions that perform well under a wide class of semi myopic strategies for every combination of such strategies the auction is associated with a different algorithm or allocation rule and so we have a family of semi myopic algorithms we show that any algorithm in this family obtains at least 1 3 of the optimal social welfare we also provide some game theoretic justification for acting in a semi myopic way we suggest a new notion of set nash equilibrium where we cannot pinpoint a single best response strategy but rather only a set to which best response strategies belong we show that our auctions have a set nash equilibrium which is all semi myopic

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

component commonality with service level requirements this paper extends recent results of baker et al baker k r m j magazine h l w nuttle 1986 the effect of commonality on safety stocks in a simple inventory model management sci 32 982 988 in understanding the impact of component commonality on stocking levels under service level constraints a model is formulated for an arbitrary number of products with general joint demand distribution the results obtained are not all intuitive while utilizing commonality is beneficial nothing general can be said about the resulting change in the components stock levels when the cost structure is of a particular simple form though some interesting general patterns do emerge we also discuss the case of using a service level measure where rationing of common components might be required and characterize the implied rationing rule

informational limitations of ascending combinatorial auctions abstract we study the inherent limitations of natural widely used classes of ascending combinatorial auctions specifically we show that ascending combinatorial auctions that do not use both non linear prices and personalized prices cannot achieve social efficiency with general bidder valuations we also show that the loss of efficiency can be severe and that only a diminishing fraction of the social welfare may be captured this justifies the added complexity in the auctions suggested by e g parkes and ungar 2000 29 and ausubel and milgrom 2002 2

the problem of multiple commons a market design approach abstract there are several locations each of which is endowed with a resource that is specific to that location each agent will go to a single location and harvest some of the resource there several agents may go to each location and thereby cause a congestion effect that is modeled in a general way we assign harvesting rights based on preferences alone though we later extend the model to accommodate private endowments of money we find the best allocation rule in the class of rules that are strategy proof anonymous and that satisfy a weak continuity property for a special class of preferences we also find an ascending mechanism similar to an auction that implements the rule the rule coincides with a special pseudo market equilibrium wherein agents buy their desired resource with tokens distributed by the social planner

a multi item auction with budget constrained bidders and price controls we extend the multi item auction model of talman and yang 2008 and andersson et al 2015 by considering both unit demand bidders with budget constraints and price controls on bidding items due to these budget and price restrictions a walrasian equilibrium generally fails to exist to achieve efficiency we propose a rationed equilibrium whose allocation is in the core we also construct an ascending auction to find the proposed rationed equilibrium in pseudo polynomial time

constrainedly fair job assignments under minimum wages a number of jobs are to be assigned to a greater number of workers while having to abide by the law of minimum wages firms must determine who should be assigned which job and at what salary in such situations fair envy free allocations usually fail to exist to cope with this situation this paper proposes a new concept of fairness called constrained fairness among the set of constrainedly fair allocations the so called constrainedly fair and minimal allocations are of particular interest the reason for this is that the salaries are not only compatible with the minimum wages they are also optimal from the standpoint of cost minimizing firms and the assignment of jobs is efficient from the viewpoint of workers a convergent dynamic procedure that identifies constrainedly fair and minimal allocations is proposed furthermore strategic properties of the mechanism are derived and two notions of efficiency are evaluated

multi item vickrey dutch auctions descending price auctions are adopted for goods that must be sold quickly and in private values environments for instance in flower fish and tobacco auctions in this paper we introduce ex post efficient descending auctions for two environments multiple non identical items and buyers with unit demand valuations and multiple identical items and buyers with non increasing marginal values our auctions are designed using the notion of universal competitive equilibrium uce prices and they terminate with uce prices from which the vickrey payments can be determined for the unit demand setting our auction maintains linear and anonymous prices for the homogeneous items setting our auction maintains a single price and adopts ausubel s notion of clinching to compute the final payments dynamically the auctions support truthful bidding in an ex post nash equilibrium and terminate with an ex post efficient allocation in simulation we illustrate the speed and elicitation advantages of these auctions over their ascending price counterparts

analysis of an industrial component commonality problem we discuss a case study of an industrial production marketing coordination problem involving component commonality for the product line considered the strategic goal of the company is to move from the current low volume market to a high volume market the marketing department believes that this can be achieved by substantially lowering the end products prices however this requires a product redesign to lower production costs in order to maintain profit margins the redesign decision involves grouping end products into families all products within one family use the same version of some components this paper fits in the stream of recent literature on component commonality where the focus has shifted from inventory cost savings to production and development cost savings further we consider both costs and revenues leading to a profit maximization approach the price elasticity of demand determines the relationship between the price level and number of units sold consequently we integrate information from different functional areas such as production marketing and accounting we formulate the problem as a net present value investment decision we propose a mixed integer nonlinear optimization model to find the optimal commonality decision the recommendation based on our analysis has been implemented in the company in addition the application allows us to experimentally validate some claims made in the literature and obtain managerial insights into the trade offs

online ad auctions i describe how search engines sell ad space using an auction i analyze advertiser behavior in this context using elementary price theory and derive a simple way to estimate the producer surplus generated by online search advertising it appears that the estimated value of online advertising tends to be between 2 and 2 3 times advertising expenditures jel d44 auctions d21 firm behavior

double implementation in a market for indivisible goods with a price constraint i consider the problem of assigning indivisible objects to agents in which each agent pays a price for his object and all prices sum to a given constant the objective is to select an assignment price pair that is envy free with respect to the agents true preferences i propose a simple mechanism whereby agents announce valuations for all objects and an envy free allocation is selected with respect to these announced preferences i prove that the proposed mechanism implements both in nash and strong nash equilibrium the set of true envy free allocations

a theory of jump bidding in ascending auctions abstract jump bidding is a commonly observed phenomenon that involves bidders in ascending auctions submitting bids higher than required by the auctioneer such behavior is typically explained as due to irrationality or to bidders signaling their value we present field data that suggests such explanations are unsatisfactory and construct an alternative model in which jump bidding occurs due to strategic concerns and impatience we go on to examine the impact of jump bidding on the outcome of ascending auctions in an attempt to resolve some policy disputes in the design of ascending auctions

a theory of buyer seller networks this paper introduces a new model of exchange networks rather than markets of buyers and sellers it begins with the empirically motivated premise that a buyer and seller must have a relationship a link to exchange goods networks buyers sellers and the pattern of links connecting them are common exchange environments this paper develops a methodology to study network structures and explains why agents may form networks in a model that captures characteristics of a variety of industries the paper shows that buyers and sellers acting strategically in their own self interests can form the network structures that maximize overall welfare

on vickrey type auction procedures abstract although a vickrey type auction provides a dominant strategy for every buyer bidder even in a multi item setting a seller can manipulate the auction this paper attempts to show that the manipulation can be avoided by suitably modifying the initial price vector

auction protocols for decentralized scheduling decentralized scheduling is the problem of allocating resources to alternative possible uses over time where competing uses are represented by autonomous agents market mechanisms use prices derived through distributing bidding protocols to determine schedules we investigate the existence of equilibrium prices for some general classes of scheduling problems the quality of equilibrium solutions and the behavior of an ascending auction mechanism and bidding protocol to remedy the potential nonexistence of price equilibria due to complementarities in preference we introduce additional markets in combinations of basic goods finally we consider direct revelation mechanisms and compare to the market based approach journal of economic literature classification numbers c62 c70 d44

ascending price vickrey auctions for general valuations ascending price auctions typically involve a single price path with buyers paying their final bid price using this traditional definition no ascending price auction can achieve the vickrey clarke groves vcg outcome for general private valuations in the combinatorial auction setting we relax this definition by allowing discounts to buyers from the final price of the auction or alternatively calculating the discounts dynamically during the auction while still maintaining a single price path using a notion called universal competitive equilibrium prices shown to be necessary and sufficient to achieve the vcg outcome using ascending price auctions we define a broad class of ascending price combinatorial auctions in which truthful bidding by buyers is an ex post nash equilibrium any auction in this class achieves the vcg outcome and ex post efficiency for general valuations we define two specific auctions in this class by generalizing two known auctions in the literature 11 24

a simple selling and buying procedure abstract for the assignment game we analyze the following mechanism sellers simultaneously fix their prices first then buyers sequentially decide which object to buy also each buyer may report his or her indifferences along with the previous buyers indifferences to the following buyer the first phase determines the potential prices while the second phase determines the actual matching reporting truthfully the indifferences is always a dominant strategy for the buyers moreover when buyers state their true indifferences the subgame perfect equilibria outcomes of the mechanism correspond to the maximum equilibrium price vector together with optimal matchings journal of economic literature classification numbers c78 d78

bargaining in stationary networks we study an infinite horizon game in which pairs of players con nected in a network are randomly matched to bargain players who reach agreement are replaced by new players at the same positions in the network we show that all equilibria are payoff equivalent the payoffs and the set of agreement links converge as players become patient several new concepts mutually estranged sets partners and shortage ratios provide insights into the relative strengths of the positions in the network we develop a procedure to deter mine the limit equilibrium payoffs for all players characterizations of equitable and nondiscriminatory networks are also obtained jel c78 d85 competitive equilibrium theory assumes large and anonymous markets in which every buyer can trade with every seller underlying these assumptions are standard goods and services that may be traded at low transaction costs by agents who are not in specific relationships with one another however in many markets goods and services are heterogeneous e g cars apartments or need to be tailored to particular needs e g manufacturing inputs technical support furthermore trad ing opportunities may depend on transportation costs social relationships infor mation advertising trust technological compatibility joint business opportunities free trade agreements etc in such cases it is natural to model the market using a network where only pairs of connected agents may engage in exchange new theories are needed to explore the influence of the network structure on market outcomes many questions arise how does an agent s position in the net work determine his bargaining power and the local prices he faces who trades with whom and on what terms when are prices uniform in the network one possible conjecture is that an agent s bargaining power is determined by his relative number of connections in the network however this simple theory is implausible consider the network of four sellers located at the top nodes and nine buyers located at the bottom nodes depicted in figure 1 assume that each seller supplies one unit of a homogeneous indivisible good each buyer demands one unit of the good and all buyers have identical values for the good the buyer located in the middle has the largest number of links in the network as he is connected to each

the english auction with differentiated commodities abstract we study economies with indivisibilities that satisfy the gross substitutes gs condition we define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest walrasian prices this procedure is a generalization of the auction studied by g demange d gale and m j sotomayor polit econ 94 1986 863 872 in our auction truthful revelation of demand is a perfect bayesian equilibrium if the smallest walrasian prices correspond to the vickrey clarke groves payments however no dynamic auction can reveal sufficient information to implement the vickrey mechanism if all gs preferences are allowed journal of economic literature classification numbers d4 d44 d5 d51

competitive equilibria in two sided matching markets with general utility functions we present an exact characterization of utilities in competitive equilibria of two sided matching markets in which the utility of each agent depends on the choice of partner and the terms of the partnership potentially including monetary transfer examples of such markets include sellers and buyers or jobs and workers demange and gale showed that the set of competitive equilibria in this type of market forms a complete lattice with each extreme point of the lattice representing an equilibrium with the highest utilities for the agents on one side and the lowest utilities for the agents on the opposite side our characterization is based on establishing a connection between the competitive equilibria of a market and the competitive equilibria of certain strict subsets of that market each obtained by removing exactly one agent this characterization captures the effect of competition when agents are added to the market or removed from the market it gives a precise procedure for constructing competitive eq

rental harmony with roommates abstract we prove existence of envy free allocations in markets with heterogenous indivisible goods and money when a given quantity is supplied from each of the goods and agents have unit demands we depart from most of the previous literature by allowing agents preferences over the goods to depend on the entire vector of prices we then show how our theorem may be applied in two related problems existence of envy free allocations in a version of the cake cutting problem and existence of equilibrium in an exchange economy with indivisible goods and money our proof uses shapley s k k m s theorem and hall s marriage lemma

connecting the cooperative and competitive structures of the multiple partners assignment game multiple partners assignment game is the name used by sotomayor the multiple partners game in m majumdar ed equilibrium and dynamics essays in honor of david gale the macmillan press ltd new york 1992 the lattice structure of the set of stable outcomes of the multiple partners assignment game int j game theory 28 1999 567 583 to describe the cooperative structure of the many to many matching market with additively separable utilities stability concept is proved to be different from the core concept an economic structure is proposed where the concept of competitive equilibrium payoff is introduced in connection to the equilibrium concept from standard microeconomic theory the paper examines how this equilibrium concept compares with the cooperative equilibrium concept properties of interest to the cooperative and competitive markets are derived

a smart market for industrial procurement with capacity constraints we address the problem of designing multi item procurement auctions for a monopsonistic buyer in capacity constrained environments using insights from classical auction theory we construct an optimization based auction mechanism smart market relying on the dynamic resolution of a linear program minimizing the buyer s cost under the suppliers capacity constraints suppliers can modify their offers in response to the optimal allocation corresponding to each set of bids giving rise to a dynamic competitive bidding process to assist suppliers we also develop a bidding suggestion device based on a myopic best response mbr calculation that solves an associated optimization problem assuming linear costs for the suppliers we study within a game theoretic framework the sequence of bids arising in this smart market under a weak behavioral assumption and some symmetry requirements an explicit upper bound for the winning bids is established we then formulate a complete behavioral model and solution methodology based on the mbr rationale and show that the bounds derived earlier continue to hold we analytically derive some structural and convergence properties of the mbr dynamics in the simplest nontrivial market environment which suggests further possible design improvements and investigate bidding dynamics and incentive compatibility issues via numerical simulations

housing prices and the savings of renters abstract this paper studies the effects of housing prices on the net worth of young households because prospective homeowners must accumulate down payments a change in housing prices can change their savings patterns theoretically the effect of increases in house prices on savings is ambiguous because households can increase their saving to afford the larger down payment or decrease their saving because they have chosen to delay or forego purchasing a house using data from the 1984 panel study of income dynamics 27 i show that empirically the effect of increased housing prices on saving is positive and quite large relative to the savings of young households young renter households living in cities with high housing prices have more net worth than those living in cities with lowering housing prices controlling for both the income of the households as well as the per capita income of the city in which they live

the vcg auction in theory and practice abstract we describe two auction forms for search engine advertising and present two simple theoretical results concerning i the estimation of click through rates and ii how to adjust the auctions for broad match search we also describe some of the practical issues involved in implementing a vcg auction

commonality in product design cost saving valuation change and cannibalization abstract offering a variety of products is important for a firm to attract different consumer segments however high product variety increases production and distribution costs modular product design and parts commonality are approaches used to counter this trend in cost and still offer a variety of products this paper develops a model to examine when modular products should be introduced and how much modularity to offer the model looks at a market consisting of a high segment and a low segment customers choose the product that maximizes their surplus which is defined as the product s utility minus its price presence of commonality affects the utility of a product greater commonality decreases production cost but makes the products more indistinguishable from one another this makes the product more desirable for the low segment but less desirable for the high segment the firm s objective is to design the products and set the prices so as to maximize its profit

maximum score estimates of the determinants of residential mobility implications for the value of residential attachment and neighborhood amenities abstract this paper uses a semiparametric empirical technique maximum score to estimate the determinants of the decision of low income renters to move out of their dwelling the maximum score estimates prove to be far more precise than probit estimates the estimates are used to show that low income residents highly value remaining in their dwelling in addition these estimates are used to illustrate an alternative method to measure willingness to pay for neighborhood amenities which we argue to be superior to hedonic based wtp measures

optimal temporal product introduction strategies under valuation changes and learning consider a firm facing two consumer segments with differing valuations for quality the demand is stationary and known and consumers make repeat purchase over two time periods however once a premium product is introduced the valuations of the consumers change in the next period the firm derives a cost savings due to learning effect in the second period the magnitude of which depends on the sales volume in the first period under such a situation should a firm introduce a premium product before a basic product or the vice versa should it introduce two products simultaneously when should a firm expand or consolidate its product line what is the optimal product introduction strategy for a firm using a two period stylized model we seek to answer these questions we characterize the optimal product introduction strategy for the firm we describe three easily calculable parameters that govern the optimal choice of the firm the conditions under which a firm should expand or consolidate its product line are discussed we study the effects of cost savings and customer valuation changes we show that the dominated product strategies in absence of these effects can be a part of an optimal product strategy of a firm under valuation changes and cost savings the managerial implications of the model are discussed

robust auctions for revenue via enhanced competition in robust auctions for revenue via enhanced competition t roughgarden i talgam cohen and q yan revisit the classic bulow klemperer result this result compares the revenues of two well know

elicitation of honest preferences for the assignment of individuals to positions the problem of eliciting honest preferences from individuals who must be assigned to a set of positions is considered individuals know that they will be charged for the positions to which they are assigned a set of prices that provide no incentive for the individual to misrepresent his preferences is suggested it is shown that these prices constitute an element of the optimal solution to the dual of a linear programming assignment problem both the optimal allocation and the prices to be charged can be derived by solving two linear programming problems once preferences have been elicited the procedure can usefully be viewed as a simulation of a competitive market under conditions where such a market cannot be expected to function well it results in an efficient allocation where all resources are valued at their opportunity costs and consumer surplus is maximized its outcome thus has the desirable properties of competitive market equilibria

a model of money with multilateral matching we develop a model of decentralized monetary exchange to examine the distributional effects of inflation across heterogeneous agents the agents have private information about their productivity preferences or money holdings matching is multilateral and each seller is visited by a stochastic number of buyers the good is allocated according to a second price auction in money in equilibrium homogeneous buyers hold different amounts of money leading to price dispersion we find the closed form solution for the distribution of money holdings entry of sellers is suboptimal except at the friedman rule inflation acts as a regressive tax

dynamic aspects of consumer decisions in housing markets abstract in this study we estimate a model of the joint tenure length of stay and consumption level choices of families in the housing market this is the first attempt we know of to do this type of estimation the data pertain to a single residence spell per household from the panel study of income dynamics wealthier and better educated families were found to be more mobile in terms of housing consumption after accounting for tenure choice and controlling for planned length of stay renters and owners were found to have similar demand function relationships in terms of the impacts of socioeconomic variables this confirms the notion that renters and owners are not differentiated by housing choice but simply in life cycle circumstances as to when it is optimal to own or rent

the package assignment model we study assignment problems where individuals trade packages consisting of several rather than single objects although buyers reservations values are non additive efficient assignments can be formulated as a linear programming problem in which the pricing functions expressing duality may be non linear in the objects constituting the packages the interconnections among the linear programming formulation walrasian equilibrium and the core are established in the single seller auction version a necessary and sufficient condition is given for the vickrey payoff point to be implementable by a pricing equilibrium journal of economic literature classification numbers c62 d44 d51

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

an ascending vickrey auction for selling bases of a matroid consider selling bundles of indivisible goods to buyers with concave utilities that are additively separable in money and goods we propose an ascending auction for the case when the seller is constrained to sell bundles whose elements form a basis of a matroid it extends easily to polymatroids applications include scheduling allocation of homogeneous goods and spatially distributed markets among others our ascending auction induces buyers to bid truthfully and returns the economically efficient basis unlike other ascending auctions for this environment ours runs in pseudopolynomial or polynomial time furthermore we prove the impossibility of an ascending auction for nonmatroidal independence set systems

core structure and comparative statics in a hybrid matching market abstract flexible firms compete by means of wages in the assignment market while rigid firms have no flexibility over terms of appointment in the marriage market workers trade with both kinds of firms in the hybrid market examples show that standard results that characterize the core of the marriage market respectively assignment market are not robust to the entrance of flexible respectively rigid firms to this market a new algebraic structure provides a different characterization for the core of the hybrid model and reflects a sort of robustness to the exit of rigid respectively flexible firms from this market meaningful comparative static results are derived

operationalizing technology improvements in product development decision making abstract achieving competitive advantage and price premiums in many technology based markets requires the incorporation of current technology in new products to do so firms in hyper competitive environments increasingly plan and design their products concurrent with the independent development and validation of underlying technologies simultaneous validation of a core technology has important implications for a company s product positioning and launch sequence decisions making these traditional marketing decisions relevant to operations managers prior research has shown that to minimize cannibalization in the absence of such improvements in technology a firm should not launch low end products before high end products however concurrent evolution of technology can make it desirable and even necessary to introduce low end products before high end products this is because in technology based industries improvements in technology delay the introduction of a high end product and a firm must trade off the benefit of launching the low end product earlier greater discounted profits against the cost of cannibalization of high end product sales high end product cannibalization can be further reduced by offering the customer an option to upgrade from the low end to high end product with important implications for the firm s product positioning and introduction sequence decisions based on our study in the high technology industry we model the product positioning and introduction sequence decisions under the simultaneous evolution of technology our analysis indicates that it may be optimal in a variety of circumstances for a firm to launch products in an increasing order of performance even in the absence of network externalities besides presenting analytical results for product positioning and profit from different introduction sequences the paper also makes a contribution to managerial practice by providing insights in the form of a conceptual framework

how to efficiently allocate houses under price controls we examine a housing market with price controls and show how the allocation problem can be solved through a price system we demonstrate that the auction of talman and yang 2008 always generates a core allocation thus resulting in a pareto efficient and stable outcome

shapley s conjecture on the cores of abstract market games abstract shapley 1955 introduced the model of an abstract market game as a generalization of the assignment game model among several other models he conjectured that abstract market games possess non empty cores we analyze properties of abstract market games and provide a proof of this conjecture for cases with four or fewer players we show by example that in general the structure of an abstract market game is not strong enough to guarantee the nonemptiness of the core we establish supplemental conditions for the conjecture to hold our supplemental conditions are satisfied by the assignment games and abstract market games with one side consisting of a single player as with package auction games in ausubel and milgrom 2002

the exposure problem and market design markets have an exposure problem when getting to the optimal allocation requires a sequence of transactions which if started but not completed leaves at least one trader with losses we use laboratory experiments to evaluate the effect of the exposure problem on alternative market mechanisms the continuous double auction performs poorly efficiency is only 20 when exposure is high and 55 when it is low a package market effectively eliminates the exposure problem in low and high exposure treatments efficiency is 82 and 89 respectively building on stability notions from matching theory we introduce the concept of mechanism stability a model of trade that combines mechanism stability with noisy best responses and imperfect foresight explains the difference in market performance finally decentralized bargaining with contingent contracts performs well with perfect information and communication but not in the more realistic case when traders preferences are privately known

multi item auctions a collection of items is to be distributed among several bidders and each bidder is to receive at most one item assuming that the bidders place some monetary value on each of the items it has been shown that there is a unique vector of equilibrium prices that is optimal in a suitable sense for the bidders in this paper we describe two dynamic auction mechanisms one achieves this equilibrium and the other approximates it to any desired degree of accuracy

economic engineering and the design of matching markets the contributions of alvin e roth alvin roth s research on and design of new economic systems has had a wide and large impact on human welfare from the matching of residents to medical programs to the assignment of students to schools to the manner in which kidneys are allocated to patients needing transplants this article discusses his important contributions to the understanding and improvement of matching markets highlighting roth s key roles in some of the most prominent successes of market design and the ascension of economic engineering

a determination of bid rents through bidding procedures abstract rent profiles in land markets with finitely many participants are derived under two bidding procedures free unit size bidding and single unit size bidding free unit size bidding is shown to be basically equivalent to an english auction whereas the rent determination problem under single unit size bidding reduces to a mathematical programming problem an application of the latter case is provided in which a density model of land use is shown to be a good approximation of appropriately chosen discrete models

on auction protocols for decentralized scheduling abstract this note shows that for the combinatorial market goods defined by wellman et al 2001 there may not exist an optimal allocation that is in equilibrium moreover this result holds even if the value of each processed job is independent of its completion time the proposed algorithm for finding an equilibrium allocation using an assignment model fails due to complementarity even for instances that admit an optimal allocation which is in equilibrium

non manipulable house allocation with rent control in many real life house allocation problems rents are bounded from above by price ceilings imposed by a government or a local administration this is known as rent control because some price equilibria may be disqualified given such restrictions this paper proposes an alternative equilibrium concept called rationing price equilibrium tailored to capture the specific features of housing markets with rent control an allocation rule that always selects a rationing price equilibrium is defined and it is demonstrated to be constrained efficient and group non manipulable for almost all preference profiles in its bounding cases the rule reduces to a number of well known mechanisms from the matching literature in this sense the housing market with rent control investigated in this paper integrates several of the predominant matching models into a more general framework