how to set minimum acceptable bids with an application to real estate auctions in a general auction model with affiliated signals common components to valuations and endogenous entry we compute the equilibrium bidding strategies and outcomes and derive a lower bound on the optimal reserve price this lower bound can be computed using data on past auctions combined with information about the subsequent sales prices of unsold goods we illustrate how to compute the lower bound using data from real estate auctions

secret versus public reserve price in an outcry english procurement auction experimental results abstract in a set of human experiments we analyze the impact of the buyer s reserve price policy in an online open outcry reverse auction we measure the impact of revealing or not the reserve price on the buyer s expected cost when suppliers may be risk averse results confirm that the optimal public reserve price policy dominates for the buyer when the lowest cost supplier is weakly risk averse but in contrast with theory the secret reserve price policy does not dominate when he becomes very risk averse analysis of strategic suppliers bidding behavior shows in conformity with theory that they react to the secret reserve price and are more aggressive when they are more risk averse this explains why the optimal public reserve price does not perform better in this context but is equivalent to the secret one however strongly risk averse bidders are less aggressive than predicted by theory that is why the secret reserve price policy does not strictly dominate

an empirical analysis of entrant and incumbent bidding in road construction auctions this paper explores differences in the bidding patterns of entrants and incumbents in road construction auctions we find that entrants bid more aggressively and win auctions with significantly lower bids than incumbents the differences in their bidding patterns are consistent with a model of auctions in which the distribution of an entrant s costs exhibits greater dispersion than that of an incumbent s and relations of stochastic dominance in the distributions do not persist for the entire range of estimated costs we also find that more efficient firms bid on average more aggressively and firms with greater backlogs bid less aggressively

bidding off the wall why reserve prices may be kept secret abstract this note shows by means of an example that in a common value auction a seller with a random reservation value can increase her ex ante expected profits by following a policy of conducting an auction in which her reserve price is kept secret compared to an auction in which the reserve price is announced by keeping the reserve price secret the seller is able to encourage greater participation from the bidders and can therefore increase the linkage of the price paid to the value of the purchased object journal of economic literature classification numbers d82 d44

timber sale auctions with random reserve prices this paper analyzes first price sealed bid auctions of standing timber organized by the french forest service office national des forets onf a feature of these auctions is that they are held wi

the shill bidding effect versus the linkage principle abstract the analysis of second price auctions with externalities is utterly modified if the seller is unable to commit not to participate in the mechanism for the general symmetric model introduced by milgrom and weber p milgrom r weber a theory of auctions and competitive bidding econometrica 50 1982 1089 1122 we characterize the full set of separating equilibria that are symmetric among buyers and with a strategic seller being able to bid in the same way as any buyer through a so called shill bidding activity the revenue ranking between first and second price auctions is different from the one arising in milgrom and weber the benefits from the highlighted linkage principle are counterbalanced by the shill bidding effect

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

no trade in second price auctions with entry costs and secret reserve prices we consider a second price private value auction in the presence of an exogenous participation cost and a secret reserve price endogenously set by the seller we show that if the entry cost is strictly positive the only equilibrium outcome is that the seller chooses a reserve price that deters entry and no buyer enters

sequentially optimal auctions abstract in auctions where a seller can post a reserve price but if the object fails to sell cannot commit never to attempt to resell it revenue equivalence between repeated first price and second price auctions without commitment results when the time between auctions goes to zero seller expected revenues converge to those of a static auction with no reserve price with many bidders the seller equilibrium reserve price approaches the reserve price in an optimal static auction an auction in which the simple equilibrium reserve price policy of the seller mirrors a policy commonly used by many auctioneers is computed journal of economic literature classification numbers c78 d44 d82

when does public information undermine the efficiency of reverse auctions for the purchase of ecosystem services abstract government agencies that conduct reverse auctions related to the payment of ecosystem services pes traditionally provide a significant amount of public information about past auction results this information includes not only the amount of money spent by the government but also can include various information about the accepted bids this research uses induced value experiments to evaluate the effect of past auction information on seller landholder rent seeking results suggest that sellers use this public information and learn how to secure higher rents however when sellers are given information only about the buyer s government agency s budget they secure lower rents results also suggest that relative budget size affects rents and that budget stochastic variability in the presence of market information diminishes the effect thus in the presence of public information and equivalent total outlays variable budgets are more likely than stationary budgets to achieve auction fiscal efficiency the measure of whether the auction achieves the greatest pes benefits given its limited budget finally this research finds that auctions with greater heterogeneity in seller opportunity costs are likely to be less fiscally efficient than when the distribution is more homogeneous

elasticidade da pobreza em relacao a renda media e a desigualdade no brasil e nas unidades da federacao the paper shows how to compute the elasticities of poverty measures the poors head count ratio sen s poverty index and the measure of foster greer and thorbecke in relation to the mean income and in relation to the gini index g assuming that the income distribution is lognormal analysing how these poverty elasticities vary as functions of and g the elasticities of the poors head count ratio are computed for brazil and its states in 1999 considering the distribution of per capita household income comparing the results with those obtained by marinho and soares 2003 with other methodology the two estimates show very similar patterns of variation between brazilian states the obvious advantage of the method used in this paper is the possibility to compute the elasticities using only the values of and g for an income distribution the elasticities are also computed for 2001 and 2002

conservation auctions should information about environmental benefits be made public most bid evaluation systems in conservation auctions consider both the proposed payment and the environmental attributes when auctioneers have a more comprehensive understanding of the conservation benefits than bidders do information becomes a central element of the auction design concealing information about conservation benefits may be the optimal strategy when entry decisions are not relevant however disclosing information may motivate landholders whose lands are associated with high environmental benefits to participate in an auction the present study demonstrates that revealing information about conservation benefits can be an optimal strategy if it enhances an auction s participation rate when bid acceptance rates are high copyright 2013 oxford university press

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

competition based environmental policy an analysis of farmland preservation in maryland policy makers have turned to competition based voluntary enrollment programs as a cost effective way to achieve preferred land uses this paper studies bidder behavior in an innovative auction based program in which farmers compete to sell and retire the right to develop their land we derive a reduced form bidding model that includes private and common values this model allows us to estimate the role of bidder competition winner s curse correction and the underlying distribution of private values we estimate that the auction enrolled as many as 3 000 acres 12 more than a take it or leave it offer would have enrolled for the same budgetary cost

the effect of shill bidding upon prices experimental evidence this paper explores through a series of experiments the effect of shill bidding upon revenues and prices in auctions we study the practice of shill bidding in a common value framework our findings are consistent with the prediction that if bidders are aware of the possibility of seller participation in an auction profits will be reduced on average we also study factors that affect bidder and seller participation decisions shill bidding can alleviate the problem of the winner s curse by lowering the price and it can thus provide benefits to bidders

impact of infrastructure expenses in strategic sectors for brazilian poverty abstract this paper analyzes the impact of infrastructure investments in the reduction of poverty in brazil controlled through other determinants such as economic growth income inequality average schooling years unemployment rate and state budgets from 1995 to 2011 a model for a dynamic panel data estimated by the generalized method of moments gmm in two steps as developed by arellano bond 1991 and blundell bond 1998 found among other conclusions a significant inverse relation between public investment in infrastructure and poverty the granger causality test for panel data proposed by hurlin and venet 2001 2004 and hurlin 2004 2005 reinforced results validation

giving to the poor targeting of food aid in rural ethiopia abstract this study determines the factors underlying the allocations of food aid in ethiopia we focus on regional differences in targeting criteria and targeting accuracy according to per capita income data are drawn from two linked rural household surveys in 1995 96 we find large differences in food aid allocations across regions that cannot be explained by observable regional characteristics such as per capita income and rainfall these differences are consistent with speculation that food aid is being used by the ethiopian government to transfer resources to favored regions we also find wide variations in the criteria used to identify recipient households across regions we identify measurable indicators that could be used by food aid authorities to improve targeting effectiveness in the future both across and within regions finally we present simulation results on targeting accuracy under various targeting strategies and discuss potential benefits and shortcomings of those strategies

common values and low reserve prices i show that the benefit of a high reserve price in a common values ascending auction is lower than in the observationally equivalent private values setting put another way when bidders have common values empirical estimation based on a private values model will overstate the value of a high reserve price via numerical examples i show this same ranking typically applies to the level of the optimal reserve price as well and often to the benefit of any reserve price not just high ones with common values the optimal reserve can even be below the seller s valuation which is impossible with private values

auctions and the price of art the value of most important works of art is established by public auction either directly by an actual sale or indirectly by reference to other sales how the auction system works is thus a critical determinant of how the public s preferences are translated into the evaluation of artistic work the auction system is central in the determination of the incentives for artistic work and the efficiency of the auction system is a key determinant of the cost of creating and distributing works of art this paper contains a review of the burgeoning new research of the last decade that has been designed to shed light on how the art auction system actually works what it indicates about price formation and how well it performs we begin our discussion in section 2 with a short description of the mechanics of the auction system and then organize the remainder of our discussion around two major topics the first topic concerns how auction prices can be used to determine and compare overall price movements within the art market and other markets and the second topic concerns how the auction mechanism influences prices we

targeting of food aid in rural ethiopia chronic need or inertia abstract this paper quantifies the factors underlying the allocations of food aid by the ethiopian government together with local and international non governmental organizations ngos both across rural regions and to households within regions we focus on reduced form specifications in which as little structure as possible is put on the decision rules because so little is known about these rules and their implementation nationally representative rural household data from ethiopia collected in 1996 are used the paper determines the extent to which food aid both free distribution and food for work is targeted to poor households and communities we also demonstrate that food aid allocations display a large degree of spatial continuity over time and are concentrated in areas that at least during the time of the survey are not the poorest the paper attempts to disentangle two competing explanations for the apparent spatial rigidity of food aid allocations that the recipient areas are chronically needy or that needs shift geographically from 1 year to the next but that fixed costs in setting up operations and in the process of identifying needs lead to a degree of inertia in the location of food aid programs over time we conclude that the evidence best fits the inertia explanation

secret reserve prices in first price auctions this article offers a theoretical explanation for the use of secret reserve prices in auctions i study first price auctions with and without secret reserve price in an independent private values environment with risk neutral buyers and a seller who cares at least minimally about risk the seller can fix the auction rules either before or after she learns her reservation value fixing the rules early and keeping the right to set a secret reserve price can be strictly optimal moreover i describe the relation of using a secret reserve price to phantom bidding and non commitment to sell

on absolute auctions and secret reserve prices from a theory viewpoint the use of auctions with zero public reserve prices also called absolute auctions or of auctions with secret reserve prices is somewhat puzzling despite being common by allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret we show in a competitive environment that these auction formats may endogenously emerge we also analyze how buyers with various sophistications and sellers with various costs sort into the different formats thereby offering a range of testable predictions alternative approaches are reviewed

multi round procurement auctions with secret reserve prices theory and evidence when a secret reserve price is used in an auction the auctioneer cannot guarantee that the good can be sold out at the auction and can reauction the unsold objects in the next round motivated by this interesting feature observed in the procurement auctions organized by the indiana department of transportation we construct a dynamic bidding model in multi round procurement auctions with secret reserve prices and evaluate how the release of the auctioneer s reserve price affects bidders bidding behavior and the auctioneer s expected payment our theoretical model predicts that the equilibrium bids uniformly decline over stages and the numerical analysis of our model indicates that hiding the reserve price may be better than announcing it for the auctioneer under some specifications of underlying distributions we develop an empirical model with bidders discount factor equal to zero to recover the unknown structural parameters and to conduct counterfactual analyses copyright 2008 john wiley sons ltd

community targeting for poverty reduction in burkina faso this article develops a method for targeting antipoverty programs and public projects to poor communities in rural and urban areas the method calls for constructing an extensive data set from a large number of sources and then integrating the entire set into a geographic information system the data set includes demographic data from the population census household level data from a variety of surveys community level data on local road infrastructure public facilities water points and so on and department level data on agro climatic conditions an econometric model that estimates the impact of household community and department level variables on household consumption is used to identify the key explanatory variables that determine the standard of living in rural and urban areas this model is then applied to predict poverty indicators for 3 871 rural and urban communities in burkina faso and to map the spatial distribution of poverty in the country a simulation analysis assesses the effectiveness of village level targeting based on these predictions the results show that such targeting is an improvement over regional targeting in that it reduces leakage and under coverage

the impact of public information on bidding in highway procurement auctions a number of papers in the theoretical auction literature show that the release of information regarding the seller s valuation of an item can cause bidders to bid more aggressively this widely accepted result in auction theory remains largely untested in the empirical literature recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty we examine the impact of a policy change by the oklahoma department of transportation that led to the release of the state s internal estimate of the costs to complete highway construction projects we perform a differences in differences analysis comparing bidding in texas a state that had a uniform policy of revealing the same information all throughout the period of analysis to bidding in oklahoma our results show that in comparison to texas auctions the average bid in oklahoma fell after the change in engineers cost estimate ece policy this decline in bids was even larger for projects where the common uncertainty in costs is greater moreover the within auction standard deviation of bids fell after the change in ece policy with the most significant decline observed again in projects with greater common cost uncertainty

reputation in an internet auction market i introduction without transmission of credible information asymmetries may lead to underproduction of goods or even market failure reputation mitigates inefficiencies associated with information asymmetries by providing an informative signal of quality 1 the difficulty in quantifying reputation means that few studies can analyze empirically the role of reputation in markets our analysis of a quantified market observed measure of reputation provides direct evidence of the effect of a seller s reputation on the terms of a onetime real world transaction thereby contributing empirical support to a fundamental economic principle this study empirically examines person to person transactions within the internet market known as ebay in this virtual market of unseen participants and products buyers and sellers face the risks of repudiation as the counter party may deny the agreement after the fact buyers assume risks associated with lack of seller integrity and asymmetric information about the particular product as the buyer is typically required to send payment before the seller ships the product in addition for many ebay transactions the cost of enforcing a contract is high relative to the transaction s value resulting in a practical absence of legal enforcement 2 by providing a history of trade execution information ebay benefits market participants by reducing information asymmetries while achieving substantial transaction cost economies market participants relate personal experiences which ebay uses to calculate a numerical reputation measure for each user market participants in turn can use this reputation measure to assess counter party risk and adjust bidding behavior accordingly in a sample of 460 auctions held between january 1998 and july 1998 we find a positive relation between prices and ebay s reputation measure higher reputation sellers experience higher auction prices ceteris paribus our findings suggest that repeat players are rewarded for building reputation consistent with the belief that the high reputation seller s value of future transactions outweighs the value of taking advantage of the buyer in the current transaction buyers are willing to pay more to a higher reputation seller this article contributes to the literature not only by providing quantitative support of long accepted reputation theories but also by illustrating the use of nontraditional markets as a natural laboratory for experiments this article is an example of how a newly formed electronic market can provide the elements necessary for analytical research we find that ebay transactions for this item exhibit characteristics similar to transactions in more conventional markets namely 1 prices are higher when there is less quantity supplied when fewer of the items are available the same day 2 prices are lower during periods of lower demand times less likely to have high traffic 3 sellers with higher shipping and handling costs receive lower prices and 4 sellers failing to provide information about shipping and handling fees i e larger information asymmetries receive fewer bids dramatic innovations in online market structure and increasing availability of online market data should enable researchers to examine directly other traditionally non quantifiable economic ideas this article is organized as follows section ii describes how reputation can be used to facilitate transactions in the presence of asymmetric information section iii describes the ebay market summarizes the listing and bidding processes and discusses the reputation mechanism for this market section iv presents the price and reputation descriptive statistics associated with a consistently auctioned item and reports the empirical findings of how this item s highest bid price varies with the level of the seller s reputation we conclude in section v with a discussion of ebay s continued attempts to add value to the market through recent structural changes

poverty in egypt modeling and policy simulations abstract poverty profiles are a useful way of summarizing information on the levels of poverty and the characteristics of the poor in a society but they are limited by the bivariate nature of their informational content using the 1997 egypt integrated household survey eihs this article estimates models of household consumption in the first stage and then predicts poverty rates corresponding to changes in potential policy variables the key results of the study point to the important instrumental role of education parental background land redistribution and access to health facilities in alleviating poverty in egypt

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

reserve prices in auctions as reference points we consider second price and first price auctions in the symmetric independentprivate values framework we modify the standard model by theassumption that the bidders have reference based utility where the reserveprice minimum bid plays the role of the reference point in contrast to theusual result the seller s optimal reserve price is increasing in the number ofbidders even if an individual bidder perceives only a very small utility losswhen he has to pay more than the reserve price the impact on the optimalreserve price can be strong when there are many bidders

crescimento e desigualdade prosperidade versus armadilhas da pobreza no desenvolvimento economico dos estados brasileiros it presents a reflection about the distributive conflict that exists in scenery with social stratification and its eects for the economic development for brazilian states between 1996 and 2001 the theoretical reference links the endogenous growth models driven by externalities with structural elements of the interpretation of the productive transformation with equity the estimatives of dynamic models and simultaneous equations for panel data taken highlights the disparities between the brazilian states these were long term eect on the decelerator economic growth rates a combination of factors that deepens inequalities as real trap

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices