almost common values auctions revisited in almost common value auctions one bidder the advantaged bidder has a valuation advantage over all other regular bidders it is well known that in second price auctions with two bidders even a slight private value advantage can have an explosive effect on auction outcomes as the advantaged bidder wins all the time and auction revenue is substantially lower than in a pure second price common value auction we explore the robustness of these results to the addition of more regular bidders in second price auctions and the extent to which these results generalize to ascending price english auctions in an effort to provide insight into when and why one ought to be concerned about such slight asymmetries

buyer collusion and efficiency of government intervention in wheat markets in northern india an asymmetric structural auctions analysis this paper uses auction theory to analyze wholesale markets for wheat in northern india this approach enables us not only to characterize the market in terms of buyer asymmetries but also to detect the existence of collusion and to quantify its impact on market prices we show that buyer asymmetries exacerbate the downward impact of collusion on prices the paper also demonstrates the use of auction theory to analyze questions of government efficiency it considers whether the government paid too much for the wheat it procured at the minimum support price and shows that for our sample it did not the paper is based on a primary survey of two wholesale markets in north india

second price common value auctions under multidimensional uncertainty the literature has demonstrated that second price common value auctions are sensitive to the presence of asymmetries among bidders in a two bidder model bikhchandani 1988 reputation in repeated second price auctions j econ theory 46 97 119 has shown that if it is common knowledge that one bidder has a disadvantage compared to her opponent that bidder almost surely never wins the auction employing a similar two bidder model this paper shows that this result does not carry over when one allows for two sided uncertainty in such case in every equilibrium the disadvantaged type bidder needs to win the auction with strictly positive probability we then solve for the equilibria in two cases one with two types and another with a continuum of types and we show that they converge to the symmetric equilibria of the corresponding symmetric auctions we thus reestablish a lost linkage in the analysis of common value and almost common value auctions

trade environment and development the issues in perspective abstract this special issue on trade and the environment brings together a number of papers that are constructively critical of the conventional economic wisdom on the topic we think that this criticism is warranted because of the decidely uncritical way in which free trade has been advocated in much of the literature and especially in policy the papers analyse the validity of the underlying assumptions on which the conventional wisdom is based and provide suggestions for ways to facilitate trade that is also adequately protective of the environment sustainability and other social values in this introductory piece we discuss trade the environment and sustainability summarizing arguments in the papers included in this issue and adding a few additional points not covered by them

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

a learning approach to auctions we analyze a repeated first price auction in which the types of the players are determined before the first round it is proved that if every player is using either a belief based learning scheme with bounded recall or a generalized fictitious play learning scheme then for sufficiently large time the players bids are in equilibrium in the one shot auction in which the types are commonly known

auction designs for allocating wind energy leases on the u s outer continentalshelf abstract the anticipated expansion of offshore wind energy in the u s has been the subject of considerable legislative effort the energy policy act epact of 2005 and the outer continental shelf lands act oscla detail the criteria the federal government must follow when allocating leases for offshore wind farms the bureau of ocean energy management boem provides primary federal oversight to offshore wind in federal waters and in 2009 they released their formal management guidelines going forward this research examines lease allocation methods boem may use as well as several promising alternatives through the lens of the mandated criteria set forth by oscla and the epact of 2005 we find significant variation between allocation methods in terms of how well they meet each of the criteria price based allocations will have difficulty in meeting criteria while also accounting for the immature status of the offshore wind energy industry instead a multiple factor approach which includes non monetary considerations may be a more appropriate way to balance federal mandates and industryneeds

an experimental test of design alternatives for the british 3g umts auction in spring 2000 the british government auctioned off licences for third generation mobile telecommunications services in the preparation of the auction two designs involving each a hybrid of an english and a sealed bid auction were suggested by the government a discriminatory and a uniform price variant we report an experiment on these two designs and also compare the results to those with a pure english auction both hybrids are similar in efficiency revenue differences disappear as bidders get experienced compared to the discriminatory format the pure english auction gives new entrants better chances

an experimental investigation of the explosive effect in almost common value auctions abstract with only two bidders a slight private value advantage in a common value auction is predicted to have an explosive effect on the allocation and revenue of the auction when using a second price and or english clock mechanism this paper uses the wallet game in an english clock mechanism with two players to test these predictions the results show that the effect is proportional not explosive confirming the results of past experiments a behavioral model with two types of players naive and sophisticated is developed and tested against the experimental data in the model naive players use a rule of thumb bidding function while the sophisticated players are fully rational and when forming their strategy choosing the best response correctly account for the probability that a rival is naive or sophisticated we use cluster analysis to classify the players in the symmetric auctions as naive or sophisticated and a strict win lose criteria to classify players in the asymmetric auctions we find that those players classified as sophisticated are more aggressive in responding to high signals or advantaged status than their naive counterparts but do not lower their bids relative to the naive players when receiving low signals or when regular

turnpikes and detours in the renewable resource exploitation under price shocks abstract the maximum natural growth rate of the resource necessitates anticipative growth on the optimal path if the price increase is rapid enough if the price path satisfies certain smoothness conditions then the myopic rule is optimal we derive the length of the required forecasting horizon and the value of the forecasts in price shock situations clarifying the concepts of the forecasting and the planning horizon we introduce a new stochastic version of the model and reduce it to series of deterministic models analogously to the dasgupta heal model on new technology a numerical example of finnish forests is provided

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

bidding in a possibly common value auction abstract we analyze a second price auction with two bidders in which only one of the bidders is informed as to whether the object is valued commonly we show that any equilibrium strategy of the bidder who is uninformed must be part of an equilibrium when both bidders instead know that the auction is not common value regardless of the way in which the values are different we derive sufficient conditions for equilibrium existence

reputation in repeated second price auctions abstract a model in which two bidders take part in a series of second price comon value auctions is examined the question of an optimal auction from an auctioneer s standpoint in a repeated auction setting is partially addressed it is shown that the results from single auction models do not carry over to repeated auctions when one of the bidders is endowed with a reputation for bidding aggressively second price auctions with two bidders are highly susceptible to manipulative behaviour by an aggressive bidder and yield much lower revenues to the auctioneer

econometrics of first price auctions in this paper we propose an estimation method for the empirical study of theoretical auction models we focus on first price sealed bid and descending auctions and we adopt the private value paradigm where each bidder is assumed to have a different private value only known to him for the object that is auctioned following mcfadden 1989 and pakes and pollard 1989 our proposed method is based on simulations specifically the method relies on a simulated nonlinear least squares objective function appropriately adjusted so as to obtain consistent estimates of the parameters of interest we illustrate the proposed method by studying a market of agricultural products where descending auctions are used our analysis takes into account heterogeneity of the auctioned objects and the fact that only the winning bid is observed we estimate the parameters that characterize the distribution of the unobserved private values for each auctioned object

equilibria in open common value auctions abstract a sufficient condition for uniqueness of nash equilibrium in second price common value auctions is identified we establish that there exists a continuum of equilibria in irrevocable exit common value auctions for the case of two bidders we provide plausible sufficient conditions under which the expected seller revenue is maximized at the symmetric equilibrium an example in which the auctioneer s revenue at the symmetric equilibrium in a second price auction is strictly greater than the revenue at many asymmetric equilibria in the corresponding irrevocable exit auction is provided

coordination in auctions with entry abstract we examine self enforcing bidder coordination in auctions in which bidding is costly conditions on the distribution of valuations are identified that guarantee multiple equilibria under slightly stronger conditions within the set of sunspot payoffs only those that are convex combinations of payoffs of extreme asymmetric equilibria are interim efficient for the bidders if preplay communication is possible every no communication equilibrium payoff is interim pareto dominated for the bidders by some cheap talk equilibrium payoff when the number of auctions is large communication equilibria exist that yield ex post efficient payoffs for the bidders almost surely journal of economic literatureclassification numbers d44 d82

renewable resource management with a backstop substitute and nonautonomous prices abstract policies for managing a renewable resource in the presence of a backstop substitute are analyzed conditions for renewable and backstop resources to be relevant are discussed the extinction issue the role of myopic decision rules and the optimality of singular arc policies are examined with nonautonomous prices

travel patterns and environmental effects now and in the future implications of differences in energy consumption among socio economic groups travel patterns among different socio economic groups in sweden are investigated it is shown that elderly persons persons with low incomes and women in general do not travel extensively middle aged persons persons with high incomes and men travel much farther cars are the dominant transportation mode for all population groups aeroplanes are used mostly by high income earners and men while public transportation is mostly used by young people and women energy consumption for the different travel patterns differs substantially men with high incomes consume the most energy with 94 000 mj during one year while elderly women consume 12 000 mj when compared to a calculated sustainable level of energy consumption for travel most population groups are in excess the level for sustainable energy consumption is calculated based on an assumed global potential for renewable energy of 360 ej per year divided equally among the global population a certain share of this energy potential is supposed to be used for travelling a scenario for 2020 is presented in which vehicle energy efficiency has increased and travel patterns have changed from what they are today sustainability can only be reached when both travel patterns and vehicle technology have changed radically differences in energy consumption for travel due to age and gender are likely to remain in the future scientific knowledge from the social domains seems to be important for devising efficient strategies for a sustainable society current focus on policy measures has been mainly on technical issues

resale in second price auctions with costly participation abstract we study sealed bid second price auctions with costly participation and resale each bidder chooses to participate in the auction if her valuation is higher than her optimally chosen participation cutoff if resale is not allowed and the bidder valuations are drawn from a strictly convex distribution function the symmetric equilibrium where all bidders use the same cutoff is less efficient than a class of two cutoff asymmetric equilibria existence of these equilibria without resale is sufficient for existence of similarly constructed two cutoff equilibria with resale moreover the equilibria with resale are more asymmetric and under a sufficient condition more efficient than the corresponding equilibria without resale

bidding behavior in asymmetric auctions an experimental study abstract we review an asymmetric auction experiment based on plum int j game theory 20 1992 393 private valuations of the two bidders are independently drawn from distinct but commonly known distributions one of which first order stochastically dominates the other we test the qualitative properties of that model of asymmetric auctions in particular whether the weak bidder behaves more aggressively than the strong and then test bidders preference for first vs second price auctions

hybrid auctions revisited abstract we examine hybrid auctions with affiliated private values and risk averse bidders and show that the optimal hybrid auction trades off the benefit of information extraction in the ascending bid phase and the cost of reduced competition in the sealed bid phase

sequential common value auctions with asymmetrically informed bidders we study an in nitely repeated rst price auction with common values we focus on one sidedincomplete information in which one bidder learns the objects value which itself does not change overtime learning by the uninformed bidder occurs only through observation of the bids the proprietaryinformation is eventually revealed and the seller extracts essentially the entire rent for large discountfactors both players pay offs tend to 0 as the discount factor tends to 1 however the uninformed bidderdoes relatively better than the informed bidder we discuss the case of two sided incomplete informationand argue that under a markovian re nement the outcome is pooling as information is revealed onlyinsofar as it does not affect prices

how not to run auctions the european 3g telecom auctions abstract there were enormous differences in the revenues from the european third generation 3g or umts mobile phone license auctions from 20 euros per capita in switzerland to 650 euros per capita in the uk though the values of the licenses sold were similar poor auction designs in some countries facilitated collusion between firms and failed to attract entrants the sequencing of the auctions was also crucial we discuss the auctions in the uk netherlands germany italy austria switzerland belgium greece and denmark

modeling competitive bidding a critical essay in analyzing bidding modeling matters this paper is a critical analysis of the models available to aid competitive bidding decision making bidding strategy and auction design in real transactions after an introductory overview this paper describes the contexts in which auctions arise reviews the mainstream theory of single isolated auctions and discusses the important work involved in enrichment of this theory in doing so it indicates results that have been obtained and the sort of changes in analytical approach that are needed to tackle other critical enrichments the paper summarizes briefly what is known about the direct use of models by bidders and auction designers a general theme of this paper is that enriched models are needed to bring bidding theory closer to direct applicability in decision making

reputation in multi unit ascending auction with common values this paper considers a multi unit ascending auction with two players and common values a large set of equilibria in this model is not robust to a small reputational perturbation in particular if there is a positive probability that there is a type who always demands many units regardless of price then the model has a unique equilibrium payoff profile if this uncertainty is only on one side then the player who is known to be normal lowers her demand in order to stop the auction immediately at the reserve price hence her possibly committed opponent buys all the units she demands at the lowest possible price if the reputation is on both sides then a war of attrition emerges

design and development of a measuring method for environmental sustainability in food production systems abstract these days sustainability is a key issue for many private companies that address their sustainable corporate performance scp the perspective is essential for their license to operate and forms the basis for business principles and practices the lack of internationally accepted reporting standards on what when and where to report makes it difficult to assess sustainability however moreover measuring tools providing information on scp are only the first step towards sustainability to prevent negative effects of operations being transferred from one company to another the second step is the development of a system based approach for all companies that contribute to an end product this paper presents the findings of a study about the use of environmental indicators for food production and proposes a measuring method for environmental sustainability in food production systems the study shows that environmental scp often focuses on events at a local level the enormous number of indicators found in the literature generates too much data that often provide no additional knowledge on the environmental sustainability of a system moreover although environmental research has addressed many aspects of sustainability it has often ignored interactions overall environmental implications of food production are therefore poorly understood the proposed measuring method uses three indicators that address global environmental issues the use of energy from both fossil and renewable sources land and water the systemic approach can calculate trade offs along supply chains that make up a production system the use of the method implies an extension of environmental scp towards the overall performance of a production system the final outcome is expressed in three performance indicators the total land energy and water requirement per kilogram of available food for companies the data generated can be used to compare trends over time to compare results with targets and to benchmark a company against others for consumers data can be used to compare the environmental effects of various foods the method is also applicable to other business sectors the study is part of a multidisciplinary project on the scientific modeling and measuring of scp involving economic social and environmental dimensions acceptance of the measuring methods developed may be a powerful contribution towards creating sustainable business practices

experimental comparisons of auctions under single and multi unit demand i introduction the study of multiple unit auctions is important because of their widespread use and the high value of goods sold examples include auctions of u s treasury debt cut flowers wine foreign exchange and other financial and monetary instruments moreover since auctions are often proposed by economists as a method of sale for other goods as in mcmillan 1994 the use of auctions can be expected to increase in the future many different auction rules are used to sell these diverse commodities and auction rule changes are often suggested usually with the intention of increasing revenue or improving the allocations and thus there is a considerable and increasing number of known auction formats evaluating new or comparing different auction mechanisms using field tests can be very costly and risky however experimental methods can and have been used by economists to study the behavioral characteristics of different auction procedures kagel 1995 provides a recent comprehensive survey most experimental studies consider the behavior of auctions when there is a single unit to be sold a few studies such as cox et al 1984 1985 and mccabe et al 1990 1991 study multiple unit auctions in environments in which each bidder demands at most one object from a set of identical objects being sold the studies of smith 1967 belovicz 1979 miller and plott 1985 and burns 1985 consider multi unit demand environments these are environments in which bidders have demand for multiple identical units and are permitted to purchase multiple units of the commodity sold the extension to multi unit demand is important since the presence of multi unit demand is a characteristic of many auctions in the field including all of the examples above in this study we consider the behavior of two types of multi unit auction under both single unit and multi unit demand we construct a laboratory environment which we use to study an english clock ec which is a special type of english auction and a sealed bid auction with lowest accepted bid pricing sb in the sb each bidder pays a per unit price equal to the lowest accepted bid the ec was chosen because it is known to provide highly efficient allocations in auctions of single unit goods and therefore is likely to be suggested for many field applications the sb was chosen because of its widespread use which makes its outcomes a useful basis of comparison for the outcomes of the english clock auction 1 however we do not attempt to represent a particular field situation here instead since our interest is in understanding the basic properties of the auctions we chose an experimental design that enables us to make simple comparisons across treatments and with previous and possibly future studies the design enables us to perform simple testing of game theoretic models in some of the treatments in our view the difference between single and multi unit demand is critical as we discuss in section ii many of the results of auction theory that are valid in single unit demand environments no longer apply in multi unit demand environments suggesting that the observed behavior of auctions might also differ between the two environments therefore we isolate the effects of multi unit demand by conducting single unit demand experiments under identical market demand and supply conditions as the multi unit demand experiments these and other aspects of the experimental design are described in detail in section iii the results and a discussion are given in sections iv and v respectively ii institutions theory and previous studies the english clock auction this variant of the english auction was modeled by milgrom and weber 1982 and studied by mccabe et al 1990 1991 in our version the auction begins with all bidders publicly and simultaneously announcing their initial quantity demanded at price zero if there is excess demand the price is increased by a small increment and the bidders then announce new quantities demanded

market structure and incomplete information price formation in a real world repeated english auction abstract this paper examines the effect of buyer size on price formation in an english auction of used state police cars while open auctions generally favor competitive pricing bikhchandani 1988 develops a model of a second price common value auction in which bidders can use strategic behavior based on repeated sales to develop an aggressive reputation and as a result pay lower prices in equilibrium the paper tests this hypothesis by examining sales of 340 used automobiles sold at 13 public auctions conditional on the volume of purchases made by the three largest buyers at the auctions the empirical results show that the number of buyers plays a stronger role in price formation than does buyer size

on some myths about sequenced common value auctions abstract equilibria are constructed for classes of game models of sequenced second price auctions having identical common valued objects in some of these the equilibrium price falls on average and in others the seller loses on average by committing to announce publicly something that he knows both of these possibilities are surprises journal of economic literature classification number d44

structural econometric analysis of descending auctions since vickrey s 1961 paper the theory of auctions has considerably expanded particularly over the last decade see e g milgrom 1985 1986 and mcafee and mcmillan 1987 for recent surveys in contrast except for some experimental work only a few empirical studies have attempted to validate the new theoretical auction models using field auction data two approaches have emerged the first has concentrated upon testing some implications of the theory of auctions using reduced form econometric models with observed bids as the explained variables explanatory variables might then be the reservation price the number of potential bidders when observed and some characteristics of the auctioned object examples are hansen 1985 1986 hendricks et al 1987 and hendricks and porter 1988 the second approach which is structural has a long tradition in econometrics starting from the work of the cowles commission this approach is followed in this paper the basic idea is simple and relies upon

weighted average source points and distances for consumption origin tools for environmental impact analysis abstract this paper presents two methods to quickly assess how local people s consumption is dependant on sources other than local or domestic weighted average source points wasps or weighted average source distances wasds for consumption origin are calculated and used to illustrate the extent to which the goods consumed come from places other than where the consumer lives two case studies show the practicability of the methods the first is a comparison between the consumption origins of tomatoes and carrots and the second a comparison between grape consumption origins in 1965 and 1992 both the wasp and the wasd methods are easy to use and the results can be communicated in illustrative ways these methods however give only an estimate of possible environmental impacts

investment and harvest strategies of the finnish forest sector under different forest tax policies a differential game approach with computer based decision aid abstract this study deals with the simultaneous solution of the investment harvest and taxation problems of the finnish forest sector these strategic questions involve competitive and contradictory interests among forestry the forest industry and society we build a computer based decision aid to support a decision maker who wants to analyze the consequences of different forest tax policies it is essential to this computational approach that only minor mathematical manipulations are needed to produce equilibrium open loop nash harvest and investment strategies moreover as a differential game approach it allows us to study the tax incidence we solve our model under three alternative tax policies lump sum unit and yield taxes

repeated common value auctions with asymmetric bidders abstract this paper considers a first price common value auction with one sided private information among bidders an object is rented each period to the highest bidder without revealing the bids made in previous periods the paper extends single crossing arguments used in static games to show the existence of equilibrium in this repeated auction the model predicts that bidders bid more aggressively in a repeated auction than in a static auction because a higher bid increases the amount of information learned through bidding the aggressive bidding behavior also implies that the per period revenue of the repeated auction is higher than that of the one period counterpart this bidding behavior leads to a theoretical explanation for the winner s curse in repeated auctions in addition the model yields predictions like an increasing wage schedule over time and the institution of a signing bonus that are consistent with labor market observations