asymmetry and revenue in first price auctions abstract we show by an example that in first price ipv auctions asymmetry in bidders valuations need not reduce the revenue compared to a benchmark symmetric model with the same amount of social surplus asymmetry need not reduce competition in first price auctions

deciding between competition and collusion we develop an approach to identify and test for bid rigging in procurement auctions first we introduce a general auction model with asymmetric bidders second we study the problem of identie cation in our model we state a set of conditions that are both necessary and sufe cient for a distribution of bids to be generated by a model with competitive bidding third we discuss how to elicit a prior distribution over a e rm s structural cost parameters from industry experts given this prior distri bution we use bayes s theorem to compare competitive and collusive models of industry equilibrium finally we apply our methodology to a data set of bidding by construction e rms in the midwest the techniques we propose are not computationally demanding use e exible functional forms and can be programmed using most standard statistical packages

on the effects of joint bidding in independent private value auctions an experimental study abstract this article explores the effect of a subset of symmetric bidders joining to bid together possible applications include mergers collusion and joint bidding arrangements the change produces a strong party with a more advantageous value distribution than the remaining weak bidder s the predicted effects include inefficiency a decrease in the seller s revenue and higher bidders payoffs under risk neutrality the members of the strong party benefit less than the weak bidders the prediction is reversed when the bidders are sufficiently risk averse these hypotheses are tested experimentally contrary to the theory joint bidding increases efficiency and the seller s revenue decreases by less than expected strong bidders benefit more than weak bidders indicating that incentives to bid jointly may be greater than hypothesized additionally the experiment assesses the effect of group decision making a nash equilibrium prediction for individual group differences based on differences in risk attitudes is not supported by the data

incomplete information and rent dissipation in deterministic contests abstract in a deterministic contest or all pay auction all rents are dissipated when information is complete and contestants are identical as one contestant becomes stronger that is values the prize more total expenditures are known to decrease monotonically thus asymmetry among contestants reduces competition and rent dissipation recently this result has been shown to hold for other non deterministic contest success functions as well thereby suggesting a certain robustness in this paper however the complete information assumption is shown to be crucial i examine a tractable incomplete information model for which the complete information model is a special case with incomplete information regardless of how little total expenditures in a deterministic two player contest increase when one contestant becomes marginally stronger starting from a symmetric contest in fact both contestants expend resources more aggressively with complete information neither of them do so thus there is a discontinuity in the information structure

parenthood and the gender gap in pay we compare the income and wage trajectories of women to those of their male partners before and after parenthood focusing on the within couple gap allows us to control for both observed and unobserved attributes of the spouse and to estimate both short and long term effects of entering parenthood we find that 15 years after the first child has been born the male female gender gaps in income and wages have increased by 32 and 10 percentage points respectively in line with a collective labor supply model the magnitude of these effects depends on counterfactual relative incomes or wages within the family

measuring positive externalities from unobservable victim precaution an empirical analysis of lojack lojack is a hidden radio transmitter device used for retrieving stolen vehicles because there is no external indication that lojack has been installed it does not directly affect the likelihood that a protected car will be stolen there may however be positive externalities due to general deterrence we find that the availability of lojack is associated with a sharp fall in auto theft rates of other crime do not change appreciably at least historically the marginal social benefit of an additional unit of lojack has been fifteen times greater than the marginal social cost in high crime areas those who install lojack however obtain less than 10 percent of the total social benefits leading to underprovision by the market

mergers in symmetric and asymmetric noncooperative auction markets the effects on prices and efficiency abstract united states antitrust merger analysis has recently focused on simulating the unilateral effects of mergers we develop a model to simulate the unilateral price increase from a merger in an auction market we illustrate our results in the context of hospital mergers in the u s and calibrate our simulations to known market parameters we compare the price increases in our model to those suggested by analytically simpler models the simulation results suggest that the unilateral price increases predicted by our model are modest in general we also simulate the merger cost savings that are needed to offset the price effects

asymmetric private values auctions with application to joint bidding and mergers abstract much of the theoretical auction literature assumes that there are no observable differences between the bidders of an auction in this paper i present an asymmetric auction model where the distribution of a bidder s value depends on some commonly observed characteristics the model is applied to joint bidding and mergers in auction markets the results provide additional evidence that first price auctions are less susceptible to the acquisition and exercise of market power than open auctions

a mechanism design approach to ranking asymmetric auctions i propose a new mechanism design approach to the problem of ranking standard auctions with two heterogeneous bidders a key feature of the approach is that it may be possible to rank two auctions even if neither dominates the other for all combinations of types the approach simplifies the analysis and unifies results in the existing literature roughly speaking the first price auction is more profitable than the second price auction when the strong bidder s distribution is flatter and more disperse than the weak bidder s distribution applications include auctions with one sided externalities moreover contrary to previous work reserve prices are easily handled finally the method can be extended to some environments with many bidders

investment incentives in procurement auctions this paper investigates firms incentives to invest in cost reduction in the first price sealed bid auction a format largely used for procurement two central features of the model are that we allow firms to be heterogeneous and that investment is observable we find that firms will tend to underinvest in cost reduction because they anticipate fiercer head on competition using the second price auction as a benchmark we also find that the first price auction will elicit less investment from market participants and that this is socially inefficient these results have implications for market design when investment is important different market institutions provide different incentives for firms to reduce costs acquire information expand and so on in short to undertake any activity that affects their competitive positions accordingly the performance of these market institutions should be judged not only from a static perspective taking firms competitive positions as given but also from a dynamic perspective auction markets are a natural competitive environment to study because there is a clear sense in which we can design such markets by choosing appropriate rules for competition in this paper we study how the first price auction fpa a format commonly used for procurement affects firms incentives to invest in cost reduction many procurement markets are characterized by a small number of participants heterogeneity among firms and low rates of turnover therefore it is interesting to investigate to what extent the format used for the auction contributes to these characteristics the basic ingredients of our model are as follows there are n firms and one of them has the opportunity prior to the auction to make an investment we model this investment as an improvement in the ex ante distribution of costs for this firm the main question we ask is what are the firm s incentives to invest given that this investment is observed by its competitors clearly the benefits of such investment depend on how the firm s competitors react in other words to determine the firm s incentive to invest we need to compare the equilibrium at the procurement stage if it makes this investment and if it does not in section 3 we derive new comparative statics results for the fpa we find that after the investment the investor s opponents will bid collectively more aggressively this result holds generally when there are only two bidders or when the investor s opponents are symmetric proposition 1 otherwise a sufficient condition is that investment changes market leadership proposition 2 in the language of industrial organization investment has a negative strategic effect in the fpa this erodes 1

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

understanding the family gap in pay for women with children as the gender gap in pay between women and men has been narrowing the family gap in pay between mothers and nonmothers has been widening one reason may be the institutional structure in the united states which has emphasized equal pay and opportunity policies but not family policies in contrast to other countries that have implemented both the authors now have evidence on the links between one such family policy and women s pay recent research suggests that maternity leave coverage by raising women s retention after childbirth also raises women s levels of work experience job tenure and pay

how to translate results from auctions to procurements abstract the translation of statements from auctions to procurements is not always straightforward we define a duality relationship between them and provide the appropriate transformations needed for establishing it additionally we prove that affiliation is preserved under these transformations and establish the linkage principle for procurements

the effect of information on the bidding and survival of entrants in procurement auctions in government procurement auctions of construction contracts entrants are typically less informed and bid more aggressively than incumbent rms this bidding behavior makes them more sus ceptible to losses aecting their prospect of survival in april of 2000 the oklahoma department of transportation started releasing the internal cost estimates to complete highway construction projects using newly developed quantile regression approaches this paper examines the impact of the policy change on aggressive entrants first we nd that the information release eliminates the bidding dierential between entrants and incumbents attributed to informational asymmetries second we argue that the policy change aects the prospects of survival of entrants in the market we nd that those who used to exit the market relatively soon are now staying 37 percent longer while at the median level bidding duration increased by roughly 68 percent the policy has the potential to encourage entry in government procurement auctions and thus increase competition

on the analysis of asymmetric first price auctions we provide a new set of tools for studying asymmetric rst price auctions connecting their equilibria to the concavity of the underlying type distributions and showing how one can use surplus expressions related to symmetric auctions to bound equilibrium behavior in asymmetric auctions we apply these tools to studying procurement auctions in which as is common in practice one seller is given an advantage re ecting for example better reliability or quality we show conditions under which for any given rst price handicap auction there is a second price auction with bonuses that outperforms it with most of our results involving ex post dominance

a point decision for partially identified auction models this article proposes a decision theoretic method to choose a single reserve price for partially identified auction models such as haile and tamer 2003 using data on transaction prices from english auctions the article employs gilboa and schmeidler 1989 for inference that is robust with respect to the prior over unidentified parameters it is optimal to interpret the transaction price as the highest value and maximize the posterior mean of the seller s revenue the monte carlo study shows substantial gains relative to the revenues corresponding to a random point and the midpoint in the haile and tamer interval

low and high types in asymmetric first price auctions abstract we study first price auctions with n bidders where bidders types valuations for the object are drawn independently according to heterogeneous distribution functions we show a relation between the distributions of high types and their equilibrium bids on the other hand we show that there is no relation between the distributions of types and equilibrium bids of low types i e the equilibrium bids of low types are invariable

the vulnerability of auctions to bidder collusion previous work has addressed the relative vulnerability of different auction schemes to collusive bidding the common wisdom is that ascending bid and second price auctions are highly susceptible to collusion we show that the details of ascending bid and second price auctions including bidder registration procedures and procedures for information revelation during the auction can be designed to completely inhibit or unintentionally facilitate certain types of collusion if auctions are designed without acknowledging the possibility of collusion then the design will ignore key features that impact the potential success of colluding bidders

differential payments within a bidder coalition and the shapley value bidder coalitions at english auctions frequently distribute collusive gains among members via a secondary auction or knockout when coalition members are sufficiently heterogeneous nested coalition structures are observed in which a knockout is conducted at each level of nesting the nested knockout s characteristics are investigated within many settings we find that the expected payments to coalition members via the nested knockout equal the shapley value incentive compatibility problems of the nested knockout are also analyzed

mechanism design by an informed principal private values with transferable utility we provide a solution to the informed principal problem in the independent private values setting with monetary transfers the principal s private information creates signaling considerations that may distort the implemented allocation we show that there is no distortion all principal types implement an allocation that is optimal for the principal ex ante before he she learns his her type as an application we consider settings with linear utility for bilateral exchange in which the principal is one of the traders the solution is a combination of a participation fee a buy out option for the principal and a resale stage with posted prices

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

optimal sequential auctions sequential sealed first price and open descending price procurement auctions are studied we examine which procurement auction rule achieves the low procurement cost we show that the answer to this policy question depends on whether the items are complements or substitutes with substitutes the first price procurement auction is preferred while with complements the open descending price procurement auction is preferred we also illustrate the procurement cost minimizing auction and the auction rule preferred by the bidders with substitutes bidders prefer the open descending price procurement auction while with complements bidders prefer the first price procurement auction

super experienced bidders in first price common value auctions rules of thumb nash equilibrium bidding and the winner s curse super experienced bidders have learned to overcome the winner s curse but still earn less than 50 of nash equilibrium profits subjects deviate from the complicated nash strategy employing piecew

parenthood and gender inequality population based evidence on the child penalty in finland abstract this study presents evidence on the effect of parenthood on labor market outcomes in finland we use population based data drawn from administrative registers and an event study design centered around the birth of the first child using the specification proposed in kleven et al 2019b the study confirms that women encounter large short and long term child penalties in gross labor earnings and that penalties are associated with employment participation taxes and social security transfers considerably reduce the child penalty which also varies by the number of children

game theory econometric models application to procurements in the space industry abstract this paper presents a structural econometric analysis of procurements in the space industry we analyse bidimensional tenders in price and quality the econometric specification assumes that bidders use nash equilibrium strategies these strategies are derived analytically or computed by monte carlo procedures

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

assessing social costs of inefficient procurement design this paper considers the social costs implied by inefficient allocation of contracts in a first price sealed bid procurement auction with asymmetric bidders we adopt a constrained piecewise linear strategye quilibriumc oncept and estimatet he structural parameterso f the bidders d is tribution of costs we estimate social costs defined as the predicted cost difference between the winning firm and the most efficient bidding firm we also compare the expected procurement costs under two different auction formats the data is collected from procurement auctions of road painting in sweden during 1993 1999 the results indicate that the social costs of inefficient contract allocation is about 2 of total potential production cost and that an effi cient second pricea uction would lower the expected procurementc ost by 2 5 jel d 44 h57 c15

the effect of bidders asymmetries on expected revenue in auctions abstract bidders asymmetries are widespread in auction markets yet their impact on behavior and ultimately revenue and profits is still not well understood this paper defines a natural benchmark auction environment to which to compare any private values auction with asymmetrically distributed valuations the main result is that the expected revenue from the benchmark auction dominates that from the asymmetric auction both in the first price auction and the second price auction moreover for classes of distributions that lend themselves to a quasi ordering of more or less asymmetric configurations we prove that the expected revenue is lower the more asymmetric bidders are these results formalize the idea that competition is reduced by bidders asymmetries applications to merger analysis joint bidding and investment are discussed

disincentives for cost reducing investment abstract interpreting a result from asymmetric auctions suggests that price setting firms may have no incentive to adopt technologies that likely reduce their production costs this puppy dog behavior relies on incomplete information about rivals costs at the price setting stage

is subsidizing inefficient bidders actually costly a widespread practice particularly in public sector procurement and dispersal is to subsidize a class of competitors believed to be at an economic disadvantage arguments for such policies vary but they typically assume that benefits of subsidization must be large enough to outweigh a presumed economic cost of the subsidy when disadvantaged competitors compete in auctions the subsidy serves to make them more competitive rivals other bidders rationally respond by bidding more aggressively we consider a model of procurement auctions and show that a policy of subsidizing inefficient competitors can lower expected project cost and also enhance economic efficiency some subsidy is generally better than no subsidy for a wide range of parameters

pay for delay patent settlement generic entry and welfare abstract pay for delay settlement p4d in which the brand patentee reversely pays the generic infringer to delay market entry is typically criticized for blocking competition but is often excused for its potential to maintain innovation we present a game theoretic model to show that when the generic firm s entry decision is endogenized p4d can actually increase ex post competition under certain conditions we further explore the impact of p4d on ex ante innovation and find that the brand s innovation incentive may increase or decrease depending on the generic firm s entry cost and other factors our findings contribute to the ongoing p4d debate by identifying conditions under which 1 p4d can improve consumer surplus and 2 the trade off between competition and innovation can be reconciled

the value of technology improvements in games with externalities a fresh look at offsetting behavior abstract we model the effect of safety technology improvements in a symmetric game in which each player s payoff depends on his own precaution and the other players average precaution we derive conditions under which an improved technology increases or decreases players equilibrium utilities for mandatory safety technologies the direction of the welfare effect depends on whether the externality between players is positive or negative and on whether the technology improvement is a complement or substitute for individual precaution for safety technologies that individuals can choose whether or not to purchase individuals expend too much on reducing the loss size but may spend either too much or too little on features that reduce an individual s loss probability

asymmetric budget constraints in a first price auction abstract i solve a first price auction for two bidders with asymmetric budget distributions and known valuations for one object i show that in any equilibrium the expected utilities and bid distributions of both bidders are unique if budgets are sufficiently low the bidders will bid their entire budget in any equilibrium for sufficiently high budgets mass points in the equilibrium strategies arise a less restrictive budget distribution could make both bidders strictly worse off if the budget distribution of one bidder is dominated by the budget distribution of the other bidder in the reverse hazard rate order the weaker bidder will bid more aggressively than the stronger bidder in contrast to existing results for symmetric budget distributions with asymmetric budget distributions a second price auction can yield a strictly higher revenue than a first price auction under an additional assumption i derive the unique equilibrium utilities and bid distributions of both bidders in an all pay auction

efficiency of large private value auctions we consider discriminatory and uniform price auctions for multiple identical units of a good players have private values possibly asymmetrically distributed and for multiple units our setting allows for aggregate uncertainty about demand and supply in this setting equlibria generally will be inefficient despite this we show that such auctions become arbitrarily close to efficient if they are large and use this to derive an asymptotic characterization of revenue and bidding behavior

multiunit pay your bid auction with one dimensional multiunit demands an arbitrary number of units of a good is sold to two bidders through a discriminatory auction the bidders are homogeneous ex ante and their demand functions are two step functions that depend on a single parameter we characterize the symmetric bayesian equilibrium and prove its existence and uniqueness we compare this equilibrium with the equilibrium of the multiunit vickrey auction and with the equilibria of the single unit first price and second price auctions we examine the consequences of bundling all units into one package we study the impacts that variations of the relative supply have on the equilibrium on the bidders average payoffs per unit and on the efficiency of the equilibrium allocation

asymmetric first price auctions abstract a new approach to asymmetric first price auctions is proposed which circumvents the need to examine bidding strategies directly specifically the ratio of bidders endogenous payoffs is analyzed and compared to the ratio of the exogenous distribution functions that describe beliefs most of the results are inferred from this comparison in the existing theoretical literature assumptions of first order stochastic dominance or stronger imply that the latter ratio has very specific properties but no such assumptions are imposed here it is proven that first order stochastic dominance is necessary for bidding strategies not to cross when this assumption is relaxed in the numerical literature it is done in a manner that leads to exactly one crossing however it is straightforward to construct examples with several crossings finally bid distributions will cross in auctions with two bidders whenever second order but not first order stochastic dominance applies

numerical analysis of asymmetric first price auctions abstract we propose numerical algorithms for solving first price auction problems where bidders draw independent valuations from heterogeneous distributions the heterogeneity analyzed in this work is what might naturally emerge when subsets of distributionally homogeneous bidders collude bid functions and expected revenues are calculated for two special cases extensions to more general asymmetric first price auctions are discussed journal of economic literature classification numbers d44 c63 c72 d82

econometrics of first price auctions a survey of the theoretical and applied literature the analysis of auctions is an active area of research for both theoretical and empirical economists this paper provides an overview of the literature relevant to the econometrics of auctions from a structural approach perspective the structural approach is a framework to analyze auction data in which theory and econometrics are closely related there are three fundamental issues at the heart of the structural analysis i are there any testable restrictions imposed by the theoretic model on the data ii is it possible to identify the structural elements that characterize an auction without a priori parametric information iii what can be said about feasible estimation procedures which do not rely on parametric assumptions this survey shows how the structural approach literature has answered each question

comparative statics in first price auctions abstract two bidders take part in a first price auction we show that if a bidder s valuation distribution increases stochastically so will his bid distribution for every possible valuation his opponent will bid higher and the change is beneficial to the auctioneer we generalize our results to the asymmetric setting with n bidders and no more than two different valuation distributions journal of economic literature classification number d44

equilibria existence and characterization in auctions achievements and open questions establishing existence and characterizing equilibria is a fundamental step in the study of auctions theoretical characterizations and empirical predictions are well accepted only to the extent that they are based on equilibria however despite the fact that auctions have been extensively studied there are still many problems regarding equilibrium existence and characterization waiting for resolution in this survey we review the landmark results and highlight open questions in addition we review the standard assumptions underlying these results and discuss the suitability of the nash equilibrium solution concept we focus our review on single object auctions but also review results in multi unit divisible combinatorial and double auctions

uniqueness of the equilibrium in first price auctions abstract if the value cumulative distribution functions are strictly log concave at the highest lower extremity of their supports a simple geometric argument establishes the uniqueness of the equilibrium of the first price auction in the asymmetric independent private values model

designed to fail the medicare auction for durable medical equipment we examine the theoretical properties of the auction for medicare durable medical equipment two unique features of the medicare auction are 1 winners are paid the median winning bid and 2 bids are nonbinding we show that median pricing results in allocation inefficiencies as some high cost firms potentially displace low cost firms as winners further the auction may leave demand unfulfilled as some winners refuse to supply because the price is set below their cost we also introduce a model of nonbinding bids that establishes the rationality of a lowball bid strategy employed by many bidders in the actual medicare auctions and recently replicated in caltech experiments we contrast the median price auction with the standard clearing price auction where each firm bids true costs as a dominant strategy resulting in competitive equilibrium prices and full efficiency jel d44 i11 h57

equilibrium in sealed high bid auctions there is a voluminous theoretical literature on sealed high bid auctions auctions in which bids are sealed and the high bidder pays his bid see for example vickrey 1961 myerson 1981 riley and samuelson 1981 milgrom and weber 1982 matthews 1983 maskin and riley 1984 holt 1980 cox smith and walker 1988 a critical property on which this literature relies is the existence of equilibrium in which buyers bidding strategies are monotonic in their types this enables the analyst to perform comparative statics as the distribution of types changes and to compare the welfare properties of the high bid auction with those of other auction institutions one case in which the existence of monotonic equilibrium is readily established is that in which buyers types are distributed smoothly independently and symmetrically in this case there exists a symmetric equilibrium one in which all bidders share the same bidding behaviour as a function of their valuations and this bid function is the solution to a first order differential equation

information revelation and buyer profits in repeated procurement competition i investigate how procurement costs are affected by the information that buyers reveal about sellers behavior in a setting with two sequentially offered contracts for which a seller s privately known costs are identical expected prices are lowest when sellers learn nothing until all contracts are allocated are higher when they learn all sellers price offers as contracts are allocated and typically are even higher when they learn only the winner s identity or the winner s identity and price offer the results suggest that buyers engaged in repeated procurement may pay less by revealing minimal or extensive information rather than an intermediate amount

protection in government procurement auctions abstract discrimination against foreign bidders in procurement auctions has typically been achieved by price preferences we demonstrate that in the bidding game each level of protection via a price preference can be achieved by an equivalent tariff when government welfare depends only on net expenditures this equivalence carries over to the government s decision as such this equivalence provides a justification that agreements to eliminate price preferences to be taken in tandem with agreements to lower tariffs e g the government procurement agreement gpa in the broader context of the wto

commentary bidders experience and learning in online auctions issues and implications this study explores the implications of rejecting the sealed bid abstraction proposed by zeithammer and adams zeithammer r c adams 2010 the sealed bid abstraction in online auctions marketing sci 29 6 964 987 using a conditional order statistic model that relies on the joint distribution of the top two proxy bids of an auction zeithammer and adams show that inexperienced bidders reactive bidding is the main cause of the rejection of the sealed bid abstraction their empirical study suggests that a large percentage of bidders reactively bid and there is weak evolutionary pressure for bidders to converge to sealed bidding we discuss theoretical implications of this rejection and the role of bidder experience as well as inferences about bidder learning tracking an inexperienced bidder s bidding behavior over time we show that bidders learn and their bidding strategy gravitates toward rational bidding potential biases in bidder experience measurement and bidder learning can be assessed using a cross sectional time series data set that tracks a random sample of new ebay bidders learning speed is faster with their complete bidding history rather than feedback ratings or winning observations only we highlight the importance of proper measures of bidder experience and its effect on bidding strategy evolutions both of which play important roles in clarifying bidding behavior in online auctions

bid preference programs and participation in highway procurement auctions we use data from highway procurement auctions subject to california s small business preference program to study the effect of bid preferences on auction outcomes our analysis is based on an estimated model of firms bidding and participation decisions which allows us to evaluate the effects of current and alternative policy designs we show that incorporating participation responses significantly alters the assessment of preferential treatment policies

bidder collusion at forest service timber sales allegations of bidder collusion at forest service timber sales in the pacific northwest were common in the 1970s of course prices may be low for reasons other than collusion we formulate an empirical model that allows for both bidder collusion and supply effects and in which we control for demand conditions noncooperative behavior in which a single unit is sold the standard auction model is a special case it is found to be definitively outperformed by a model of collusion we also find that supply effects are dominated by collusion in determining the winning bids in the market

impact of valuation ranking information on bidding in first price auctions a laboratory study abstract landsberger et al landsberger m rubinstein j wolfstetter e zamir s 2001 first price auctions when the ranking of valuations is common knowledge review of economic design 6 461 480 identified optimal bidder behavior in first price private value auctions when the ranking of valuations is common knowledge and they derived comparative statics predictions regarding the auctioneer s expected revenue and the efficiency of the allocation the experiment reported here tests the behavioral components of these comparative statics predictions the results support the prediction that buyers are inclined to bid more aggressively when they learn they have the low value contrary to the theory buyers are inclined to bid less when they learn they have the high value consistent with theory the overall proportion of efficient allocations is lower than in the first price auction before information is revealed but as a result of high value bidders decreasing their bids the expected revenue does not increase on a regular basis contrary to the theory s predictions

optimal collusion proof auctions abstract we study an optimal collusion proof auction in an environment where subsets of bidders may collude not just on their bids but also on their participation despite their ability to collude on participation informational asymmetry facing the potential colluders can be exploited significantly to weaken their collusive power the second best auction i e the optimal auction in a collusion free environment can be made collusion proof if at least one bidder is not collusive or there are multiple bidding cartels or the second best outcome involves a non trivial probability of the object not being sold regardless optimal collusion proof auction prescribes non trivial exclusion of collusive bidders i e a refusal to sell to any collusive bidder with positive probability

the welfare state as provider of accident insurance in the workplace efficiency and distribution in equilibrium the welfare state provides universal insurance for workers against accidents in the workplace in equilibrium this insurance does not generate adverse safety incentives to firms noninternalized insurance makes workers sort themselves nonoptimally to firms and choose higher individual effort levels to prevent accidents as compared to insurance schemes that are internalized in the market welfare state insurance may therefore generate higher safety levels than perfect experience rating not lower an optimal income taxation scheme in the welfare state implies progressive taxation the optimal tax level increases with the extent of the welfare state copyright 1995 by royal economic society

endogenous asymmetry in a dynamic procurement auction we show how to numerically solve for a markov perfect equilibrium of a dynamic auction game where a procurer repeatedly purchases construction services from capacity constrained firms we find that the procurer is best off scheduling frequent auctions for small project sizes otherwise firm capacity utilization rates become larger and more asymmetric which softens competition and increases procurement costs we also find that forward looking bidding dampens the competition softening effects of asymmetry farsighted firms compete more intensely than myopic ones this can undermine the goal of a bid preference style affirmative action program more farsighted firms respond less to the asymmetry induced via bid preferences

asymmetry in first price auctions with affiliated private values collusion and heterogeneity across firms may introduce asymmetry in bidding games a major difficulty in asymmetric auctions is that the bayesian nash equilibrium strategies are solutions of an intractable system of differential equations we propose a simple method for estimating asymmetric first price auctions with affiliated private values considering two types of bidders we show that these differential equations can be rewritten using the observed bid distribution we establish the identification of the model characterize its theoretical restrictions and propose a two step non parametric estimation procedure for estimating the private value distributions an empirical analysis of joint bidding in ocs auctions is provided copyright 2003 john wiley sons ltd

asymmetric auctions with resale we study first and second price auctions with resale in a model with indepen dent private values with asymmetric bidders the resulting inefficiencies create a motive for post auction trade which in our model takes place via monopoly pricing the winner makes a take it or leave it offer to the loser we show a a first price auction with resale has a unique monotonic equilibrium and b with resale the expected revenue from a first price auction exceeds that from a second price auction the inclusion of resale possibilities thus permits a gen eral revenue ranking of the two auctions that is not available when these are excluded jel d44

asymmetry in procurement auctions evidence from snow removal contracts differences in cost efficiency and productivity across firms may introduce asymmetries in procure ment auctions relying on a structural approach this article investigates potential asymmetry among firms bidding for snow removal contracts in montrthe empirical results show that firms located in close proximity have a cost advantage relative to other firms in the most urbanised part of montrbecause of prohibitive equipment storage costs the extent of inefficiency due to asym metry is empirically assessed various policy experiments are performed a bidding preference policy shows that the city could expect to reduce its costs for allocating snow removal contracts when bidders willingness to pay depends in part on observable variables the princi pal s interest is not best served by creating a level auction playing field this article studies procurement auctions for snow removal contracts in montrit investigates the degree to which companies in disadvantageous locations should win even if they do not submit the lowest bid from the submitted bids a novel empirical methodology estimates the extent of cost variation across firms along with its variation within loca tion although the dispersion is substantial the gain from treating bidders unequally is limited when observed individual characteristics affect the firms costs and their bidding strategies all bidders cannot be treated alike these differences in characteristics or asymmetries among bidders may arise from their size as noted by laffont et al 1995 their capacity constraints as in jofre bonet and pesendorfer 2003 or the possession of better information as in hendricks and porter 1988 and hendricks et al 1994

asymptotic efficiency for discriminatory private value auctions we consider discriminatory auctions for multiple identical units of a good players have private values possibly for multiple units none of the usual assumptions about symmetry of players distributions over values or symmetry of equilibrium play are made because of this equilibria will typically involve inefficient allocations equilibria also become very difficult to solve for using an approach which does not depend on explicit equilibrium calculations we show that such auctions become arbitrarily close to efficient as the number of players and possibly the number of objects grows large and provide a simple characterization of limit equilibria

complements and substitutes in sequential auctions the case of water auctions we use data on sequential water auctions to estimate demand when units are com plements or substitutes a sequential english auction model determines the estimating structural equations when units are complements one bidder wins all units by paying a high price for the first unit thus deterring others from bidding on subsequent units when units are substitutes different bidders win the units with positive probability paying prices similar in magnitude even when the same bidder wins all units we re cover individual demand consistent with this stark pattern of outcomes and confirm it is not collusive but consistent with non cooperative behavior demand estimates are biased if one ignores these features

revenue equivalence in asymmetric auctions abstract the revenue equivalence theorem is generalized to the case of asymmetric auctions in which each player s valuation is drawn independently from a common support according to his her distribution function

product warranties and double moral hazard this article explores a model of warranties in which moral hazard problems play a key role the goal is to understand the important characteristics of warranties including their provision of incomplete insurance and the relationship between product quality and coverage we analyze a model in which buyers and sellers take actions that affect a product s performance since these actions are not cooperatively determined an incentives problem arises we characterize the optimal warranty contract and undertake comparative statics to determine the predicted correlation of warranty coverage and product quality

auctions with almost homogeneous bidders abstract we prove that around the symmetric case where the values are identically distributed the equilibrium of the first price auction is jointly differentiable with respect to general bidder specific parameters of the value distributions we show that the revenue equivalence between the first price and the second price auctions to the first order in the size of the parameters is an immediate consequence of this differentiability and the revenue equivalence theorem thereby formally establishing the first order equivalence fibich et al g fibich a gavious a sela revenue equivalence in asymmetric auctions j econ theory 115 2004 309 321 noticed for their particular perturbation

numerical simulations of asymmetric first price auctions abstract the standard method for computing the equilibrium strategies of asymmetric first price auctions is the backward shooting method in this study we show that the backward shooting method is inherently unstable and that this instability cannot be eliminated by changing the numerical methodology of the backward solver moreover this instability becomes more severe as the number of players increases we then present a novel boundary value method for computing the equilibrium strategies of asymmetric first price auctions we demonstrate the robustness and stability of this method for auctions with any number of players and for players with mixed types of distributions including distributions with more than one crossing finally we use the boundary value method to study large auctions with hundreds of players to compute the asymptotic rate at which large first price and second price auctions become revenue equivalent and to study auctions in which the distributions cannot be ordered according to first order stochastic dominance

first price auctions in the asymmetric n bidder case i consider the first price auction when the bidders valuations may be differently distributed i show that every bayesian equilibrium is an essentially pure equilibrium formed by bid functions whose inverses are solutions of a system of differential equations with boundary conditions i then prove the existence of an equilibrium i prove its uniqueness when the valuation distributions have a mass point at the lower extremity of the support i give sufficient conditions for uniqueness when every valuation distribution is one of two atomless distributions i establish inequalities between equilibrium strategies when relations of stochastic dominance exist between valuation distributions

standard auctions with identity dependent externalities i analyze equilibrium bidding behavior in the open ascending bid auction with identity dependent externalities with reciprocal externalities the allocation is determined by bidders consumption values alone with large nonreciprocal externalities the open auction generates higher expected revenue compared to standard sealed bid auctions the progress of the open auction reveals more information about the identity of the potential winner allowing active bidders greater opportunity to avoid incurring payoff reducing externalities the associated option value to staying active up until a relatively high price translates into higher expected revenue multiple bidders may sequentially quit at the same price and relative to sealed bid auctions bidders experience less ex post regret

the effects of soft drink taxes on child and adolescent consumption and weight outcomes abstract childhood and adolescent obesity is associated with serious adverse lifetime health consequences and its prevalence has increased rapidly soft drink consumption has also expanded rapidly so much so that soft drinks are currently the largest single contributors to energy intake in this paper we investigate the potential for soft drink taxes to combat rising levels of child and adolescent obesity through a reduction in consumption our results based on state soft drink sales and excise tax information between 1989 and 2006 and the national health examination and nutrition survey suggest that soft drink taxation as currently practiced in the united states leads to a moderate reduction in soft drink consumption by children and adolescents however we show that this reduction in soda consumption is completely offset by increases in consumption of other high calorie drinks

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

asymptotic revenue equivalence of asymmetric auctions with interdependent values we prove an asymptotic revenue equivalence among weakly asymmetric auctions with interdependent values in which bidders have either asymmetric utility functions or asymmetric distributions of signals