evaluating split estates in oil and gas leasing taking advantage of randomly assigned federal mineral rights this paper establishes the discount that mineral developers place on oil and gas leases with divided ownership results of 53 bimonthly federal oil and gas lease auctions in wyoming between february 1998 and october 2006 are examined bidders discount split estate by 11 to 14 on average but by as much as 24 for more expensive leases impacts of multiple ownerships and additional leasing stipulations are also explored this discount is interpreted as an expectation of transaction costs incurred in obtaining surface access so total costs remain unaffected on average

labor market regulation and the winner s curse i introduction in march 1992 the government of british columbia b c canada introduced the skill development and fair wage policy sdfwp which mandated the payment of fair wages on provincial public construction projects and promulgated the wage scales for construction crafts in 1994 sdfwp was enacted as legislation similar laws have been enacted in england and the united states in the past and as allen s 1983 survey shows their impact is a subject of controversy opponents argue that regulated wages distort the labor market reduce competition and increase construction costs proponents of the law on the other hand not only emphasize its long term positive effects on the living and working conditions of workers training and the consequent productivity increases but also claim that the alleged inflationary effect is counterbalanced by the improved labor and product quality in this paper i focus on another consequence of wage regulation namely its impact on bidding for public construction contracts i propose that the wage regulation will affect the construction market not only by changing the costs and quality of inputs but also through the transformation of the nature of the uncertainty that the contractors face during the bidding process the auction theory predicts that the optimal bid is responsive to the type of uncertainty under the so called common values cv model bidders face some common source of uncertainty regarding the construction cost and the winner is prone to underestimate the true cost rational and experienced bidders avoid this winner s curse by adding a surcharge to their estimated cost as uncertainty assumes a less collective and more private nature however the winner s curse becomes less of a problem and the rational bidder does not need to resort to the additional surcharge as a protection from underbidding the sdfwp may result in such a transformation in the bidding environment by reducing the uncertainty over labor costs that are common to all nonunion contractors elimination of the surcharge in turn may even offset the possibly higher labor cost in this paper i will test indirectly the hypothesis that the sdfwp influenced the bidding environment in b c in this fashion under the working assumption that contractors follow optimal rules in determining bids for this purpose i will use data from 54 public school construction projects tendered between 1989 and 1995 and compare the pre and post sdfwp unit bid prices the paper is organized as follows in section ii i discuss the relevant auction literature and the hypotheses i state the main hypotheses of the paper concerning the sdfwp and bidding behavior in section iii section iv describes the data an empirical model of bid price determination is presented and estimated in sections v vi and vii the final section concludes ii bidding and the winner s curse bidders for public school construction projects in b c submit sealed bids at a specified date and the lowest bidder wins the contract 1 many of the early sealed bid first price optimal bidding models presented in economics civil engineering and operations research literatures follow friedman 1956 according to these models bidders are risk neutral non colluding expected profit maximizers competing over a single project friedman suggests that the probability of being the lowest competitor is equal to the product of the probabilities of underbidding each competitor probability distributions of the competitors bids are to be obtained from the data on previous tenders this approach lays bare critical elements in competitive bidding first the contractor faces a trade off between profitability and the probability of winning the contract the bid must be high enough to yield a positive profit and low enough to win over other bids second superior cost efficiency enables the contractor to change the parameters of this trade off in his or her favor

empirical implications of equilibrium bidding in first price symmetric common value auctions this paper studies federal auctions for wildcat leases on the outer continental shelf from 1954 to 1970 these are leases where bidders privately acquire at some cost noisy but equally informative signals about the amount of oil and gas that may be present we develop tests of rational and equilibrium bidding in a common values model that are implemented using data on bids and ex post values we also use data on tract location and exposr values to test the comparative static prediction that bidders may bid less aggressively in common value auctions when they expect more competition we find that bidders are aware of the winner s curse and their bidding is largely consistent with equilibrium

optimal nonparametric estimation of first price auctions this paper proposes a general approach and a computationally convenient estimation procedure for the structural analysis of auctioni data considering first price sealed bid auction models within the independent private value paradigm we show that the underlying distribution of bidders private values is identified from observed bids and the number of actual bidders without any parametric assumptions using the theoiy of minimax we establish the best rate of uniform convergence at which the latent density of private values can be estimated nonparametrically from available data we then propose a two step kernel based estimator that converges at the optimal rate

competitive bidding under asymmetrical information behavior and performance in gulf of mexico drainage lease sales 1959 1969 in past outer continental shelf oil and gas lease sales winners of drainage tracts have tended to realize a higher economic return than winners of wildcat tracts this paper finds empirical support for the hypothesis that adjacent lessees have an information advantage when bidding for drainage tracts under the cash bonus bidding system this leads to superior economic returns and thus explains the difference in returns between wildcat and drainage leases the paper concludes that this difference and its cause do not pose a policy problem given empirical evidence that the government receives fair market value for the two lease categories combined

the effectiveness of a reemployment bonus abstract this paper investigates the effectiveness of the recently proposed reemployment bonus relative to the regular unemployment insurance benefits in a model where endogenous search effort plays a crucial role and the bonus is fully portrayed as an incentive contract

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

general training in labor markets common value auctions with unobservable investment abstract this paper studies the puzzle of employer financing for the general training of workers a parsimonious theory is developed based on asymmetric information between employers about the quantity of training the labor market is modeled as a common value auction with an informed and an uninformed bidder the novel feature of the game is that one of the bidders can make an unobservable investment that increases the value of the item before the auction by randomizing the amount of training provided an employer can create an endogenous adverse selection problem enabling it to compress the wage structure and capture some returns from its training investment the model generates continuous equilibrium wage and training distributions and identical employees can receive different wage offers and training levels a parametric example is used to illustrate how the shape of the wage distribution depends on the elasticity of production with respect to human capital

auctions with contingent payments there now exists a host of results concerning the revenue performance of various auction methods this note delves deeper into auction markets by examining the effects on sellers revenue of certain noncash means of payment the basic result that bidding mediums which include some contingent pricing feature generally yield the seller more revenue than do cash bids is intriguing by itself and also points out the limitations of received theory since what follows builds on the independent preferences framework it is useful to first note the assumptions of that model and the major results pertaining to it to model an auction in the independent preferences tradition one assumes that bidders have reservation values vi that are known only privately and that can be depicted as being drawn independently from some distribution f v the most important result for this model is the revenue equivalence theorem as given in john riley and william samuelson 1981 any auction involving risk neutral bidders for which the following four conditions hold a a buyer can make any bid above some minimum reserve price b the buyer making the highest bid is awarded the object c the auction rules are anonymous and d there is a common equilibrium bidding strategy in which each buyer makes a bid bi which is a strictly increasing function of his reservation value vi yields an expected revenue of

do auctions induce a winner s curse new evidence from the corporate takeover market abstract we contrast the winner s curse hypothesis and the competitive market hypothesis as potential explanations for the observed returns to bidders in corporate takeovers the winner s curse hypothesis posits suboptimal behavior in which winning bidders fail to adapt their strategies to the level of competition and the amount of uncertainty in the takeover environment and predicts that bidder returns are inversely related to the level of competition in a given deal and to the uncertainty in the value of the target our measure of takeover competition comes from a unique data set on the auction process that occurs prior to the announcement of a takeover in our empirical estimation we control for the endogeneity between bidder returns and the level of competition in takeover deals controlling for endogeneity we find that the returns to bidders are not significantly related to takeover competition we also find that uncertainty in the value of the target does not reduce bidder returns related analysis indicates that prestigious investment banks do not promote overbidding analysis of post takeover operating performance also fails to find any negative effects of takeover competition as a whole the results indicate that the breakeven returns to bidders in corporate takeovers stem not from the winner s curse but from the competitive market for targets that occurs predominantly prior to the public announcement of bids

snow removal auctions in montreal costs informational rents and procurement management using semiparametric and nonparametric estimation techniques we infer cost distributions and informational rents from 457 snow removal contracts o ered for tender by the city of montreal our results are compatible with standard received theory of competitive auctions there is a positive correlation between costs and bids and rents increase with the variance of costs bids and costs have decreased over the sample period while rents remained relatively constant the city deserves credit for these results as it has succeeded in exploiting economies of scale and triggering innovations while maintaining competition further it has been successful in adjusting its reserve prices to keep up with the decreasing cost of snow removal

a classification of factors influencing participation in collusive tendering agreements the morality of tendering practices is an issue of economic and social significance especially when large government contracts are involved criticisms are mostly concentrated around collusive tendering illegal agreements between tenderers that result in seemingly competitive bids price fixing or market distribution schemes that circumvent the spirit of free competition and defraud clients although collusion has been identified as an endemic malaise of tendering its behavioural and moral dimensions have not been systematically studied before the paper addresses this knowledge gap and describes part of an exploratory empirical investigation of the decision making patterns utilised by estimators in australia slargest construction organisations

a tale of two communities explaining deforestation in mexico summary deforestation policies in mexico need to recognize heterogeneity in community s management schemes in communities that extract wood from the forest for profit forestry projects generate funds whose investment in public goods increases the value of standing forest to those not receiving direct dividends from the projects increases in such investment help decrease deforestation in communities with other livelihoods deforestation decreases with the community s ability to form a coalition that cooperates in reducing forest clearing this is easier in smaller communities with more experienced leaders analysis using data collected in 2002 combined with satellite imagery verifies the models predictions

testing mixed strategy equilibria when players are heterogeneous the case of penalty kicks in soccer the concept of mixed strategy is a fundamental component of game theory and its normative importance is undisputed however its empirical relevance has sometimes been viewed with skepticism the main concern over the practical usefulness of mixed strategies relates to the indifference property of a mixedstrategy equilibrium in order to be willing to play a mixed strategy an agent must be indifferent between each of the pure strategies that are played with positive probability in the mixed strategy as well as any combination of those strategies given that the agent is indifferent across these many strategies there is no bene t to selecting precisely the strategy that induces the opponent to be indifferent as required for equilibrium why an agent would in the absence of communication between players choose exactly one particular randomization is not clear of course whether agents in real life actually play nash equilibrium mixed strategies is ultimately an empirical question the evidence to date on this issue is based almost exclusively on laboratory experiments e g barry o neill 1987 amnon rapoport and richard b boebel 1992 dilip mookherjee and barry sopher 1994 jack ochs 1995 kevin a mccabe et al 2000 the results of these experiments are mixed o neill 1987 concludes that his experimental evidence is consistent with nash mixed strategies but that conclusion was contested by james n brown and robert w rosenthal 1990 with the exception of mccabe et al 2000 which looks at a three person game the other papers generally reject the nash mixedstrategy equilibrium while much has been learned in the laboratory there are inherent limitations to such studies it is sometimes argued that behavior in the simpli ed arti cial setting of games played in such experiments need not mimic real life behavior in addition even if individuals behave in ways that are inconsistent with optimizing behavior in the lab market forces may discipline such behavior in the real world finally interpretation of experiments rely on the assumption that the subjects are maximizing the monetary outcome of the game whereas there may be other preferences at work among subjects e g attempting to avoid looking foolish that distort the results tests of mixed strategies in nonexperimental data are quite scarce in real life the games played are typically quite complex with large strategy spaces that are not fully speci ed ex ante in addition preferences of the actors may not be perfectly known we are aware of only one paper in a similar spirit to our own research using data from classic tennis matches mark walker and john wooders 2001 test whether the probability the player who serves the ball wins the point is equal for serves to the right and chiappori department of economics university of chicago 1126 east 59th street chicago il 60637 levitt department of economics university of chicago groseclose graduate school of business stanford university 518 memorial way stanford ca 94305 the paper was presented at games 2000 in bilbao and at seminars in paris and chicago we thank d braun j m conterno r guesnerie d heller d mengual p reny b salanie and especially j l ettori for comments and suggestions and m mazzocco and f bos for excellent research assistance any errors are ours 1 the theoretical arguments given in defense of the concept of mixed strategy equilibria relate either to puri cation john c harsanyi 1973 or to the minimax property of the equilibrium strategy in zero sum games for recent elaborations on these ideas see authur j robson 1994 and phil reny and robson 2001 2 the ultimatum game is one instance in which experimental play of subjects diverges substantially from the predicted nash equilibrium robert slonim and alvin e roth 1998 demonstrate that raising the monetary payoffs to experiment participants induces behavior closer to that predicted by theory although some disparity persists

an evaluation of active and passive labour market policy this paper reports results of an empirical study on the effectiveness of labour market policy data from austria france germany great britain sweden and the united states are used to apply a simultaneous equation model with wages and employment being the endogenous variables in order to explain employment the amount of unemployment benefits per unemployed passive labour market policy and payment for wage subsidies and training per employed and unemployed person active labour market policy are used in addition to real wages and output wages and output have their expected impact on total employment it turns out that passive labour market policy has a negative and active labour market measures a positive effect on the number of persons employed

the cost effectiveness of the u s export enhancement program bonus allocation mechanism the u s export enhancement program is evaluated from the perspective of the cost effectiveness of its bonus allocation mechanism the current mechanism resembles a discriminatory price common value auction however auction theory suggests that a discriminatory auction may not be optimal in this setting for several reasons this article evaluates the current format relative to an alternative uniform price auction estimation results reveal evidence of strategic bidder behavior under the current format and simulations suggest that adopting a uniform price auction format for bonus allocation may yield considerable savings to the treasury by eliminating incentives to pad bids and increasing participation in the auction

can the seller benefit from an insider in common value auctions abstract in existing models of first price common value auctions heterogeneous bidder information characterized by a well informed insider is detrimental to the seller s revenue we show that this is not a general principle the linkage effect of increased information identified by milgrom and weber has force in our model of heterogeneous bidders and dominates any adverse effects of an insider on revenues in addition a bidder with garbled information can profit in a first price auction if his information is private and an inside bidder may prefer to have less information about the outside bidder s signal journal of economic literature classification numbers d44 d82

do better informed investors always do better a buyback puzzle we explore the value of private investment information using data from a singular source auctions of yearling racehorses horse breeders possess superior information about their own horses and have strong financial incentives to buy the best of these back at auction however those they repurchase subsequently perform significantly worse on average earning 30 less at the racetrack than horses purchased by outsiders moreover this underperformance is concentrated in male horses despite these being purchased exclusively for racing purposes these puzzling findings cannot be explained by differences in horse risk or breeder abilities or by nonfinancial objectives or by behavioral or selection biases jel g02 g11 g14 l83 d44

search effort and unemployment insurance reconsidered in this paper the impact that receipt of unemployment benefit has on job search effort is investigated utilizing data drawn from the 1984 labour force survey reduced form search effort equations are estimated conditional on the decision to seek work

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

an empirical study of an auction with asymmetric information this paper examines federal auctions for drain age leases on the outer continental shelf from 1959 to 1969 these are leases that are adjacent to tracts on which a deposit has been discovered the authors find that the data strongly support the hypotheses that neighbor firms are better informed about the value of a lease than nonneighbor firms that neighbor firms coordinate their bidding decisions and that both types of firms bid strategically in accordance with the bayesian nash equilibrium model for first price sealed bid auctions with asymmetric information

partial pooling at the reserve price in auctions with resale opportunities abstract two features common to many auctions are the use of reserve prices and the existence of secondary markets for the goods being sold even in simple symmetric settings the combination of these features can preclude existence of an equilibrium in symmetric separating bidding strategies with a reserve price sufficiently far below the maximum endogenous valuation a symmetric equilibrium still exists but with some types pooling at the reserve the optimal reserve price depends not only on the joint distribution of bidders information before and after the auction but also on how surplus is divided in the secondary market journal of economic literature classification numbers d44 c7 l1 d82

interdependent value auctions with insider information theory and experiment abstract we develop a model of interdependent value auctions in which two types of bidders compete insiders who are perfectly informed about their value and outsiders who are informed only about the private component of their value because the bidding strategy of outsiders cannot efficiently adjust with that of insiders the second price auction is inefficient the english auction has an equilibrium in which the information outsiders infer from the history of drop out prices enables them to bid toward attaining efficiency the presence of insiders has positive impacts on the seller s revenue a laboratory experiment confirms key theoretical predictions despite evidence of naive bidding

how auctions work for wine and art interview auctioneers and even to buy a little wine in the meantime i have also had the opportunity with john abowd 1988 to observe and collect data on the auction sale of impressionist and contemporary paintings this paper reports on some of the empirical regularities that i and others have observed in the actual operation of the auction markets for these items in view of the rich and diverse array of theoretical literature on auctions it seems high time economists began to spell out precisely what facts it is meant to explain 2

a survey of recent empirical work concerning auctions in this paper the authors survey some recent empirical work concerning auctions first outlining two complementary approaches to the empirical analysis of auctions and then discussing several recent developments in the econometric analysis of field data concerning auctions

tacit collusion in auctions and conditions for its facilitation and prevention equilibrium selection in laboratory experimental markets the paper studies bidder behavior in simultaneous continuous ascending price auctions we design and implement a collusion incubator environment based on a type of public symmetrically folded and item aligned preferences tacit collusion develops quickly and reliably within the environment once tacit collusion developed it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game theoretic model the only successful remedy was a non public change in the preference of participants that destroyed the symmetrically folded and item aligned patterns of preferences creating head to head competition between two agents reminiscent of the concept of a maverick

optimal selling strategies for oil and gas leases with an informed buyer a study is presented on whether the us government can increase its revenues from the sale of drainage leases by using a different allocation mechanism the optimal mechanism is characterized for selling a lease when there is a single informed buyer and a fixed number of uniformed buyers implementation and the magnitude of potential revenue gains if any are discussed

estimating the effect of counseling and monitoring the unemployed using a job search model this paper examines the impact of the counseling and monitoring program for the unemployed with particular reference to their job finding rate application intensity and matching probability the effectiveness of counseling and monitoring is measured by using a job search model in which the job finding rate is equal to the product of the application intensity and the matching probability counseling and monitoring is an intensive job search assistance program designed to help unemployed people receiving unemployment benefits to find a job as quickly as possible the empirical analysis is based on data from a social experiment a sample of the inflow into unemployment was randomly assigned to a treatment and a control group the empirical results based on formal reduced form models show that counseling and monitoring does reduce the time taken to find a job because people participating in the program make more applications than those who are not participating although no differences are found in matching probabilities

can welfare abuse be welfare improving abstract i analyze quantitatively a model of labor search with unemployment insurance ui savings voluntary quits and various labor attachment requirements in particular i study welfare consequences of a powerful reform giving ui entitlement to workers quitting their jobs voluntarily in order to search for another one results of the model calibrated to the us labor market show that there may be significant welfare gains associated with pursuing a generous entitlement policy for quitters as compared to the us status quo moreover i employ the assumption of monetary search costs and show that it can explain the empirically documented unemployed worker search behavior finally by inducing different unemployment benefit eligibility requirements the model identifies a concrete policy that could help us understand differences in the unemployment rate match quality and income inequality between the us and europe

strategic design under uncertain evaluations structural analysis of design build auctions i investigate firms competition over price and product design under uncertain design evaluations in the context of design build db auctions reviewers design evaluations contain uncertainty from a bidder s perspective leading luck to curtail differences in firms chances of winning i model bidders behavior and derive semiparametric identification of the model primitives uncertain evaluations worsen the expected price of design quality and exacerbate an auctioneer s uncertainty in auction outcomes a simple adjustment in the auction mechanism may completely shut down the impact of uncertain evaluations on bidding incentives restoring efficient allocations of projects

exploration and development of u s oil and gas fields 1955 2002 we study the exploration and development of oil and gas fields in the u s over the period 1955 2002 we make four contributions to explain the economic evolution of the oil and gas industry during this period first we derive a testable model of the dynamics of competitive oil and gas field exploration and development second we show how to empirically distinguish hotelling scarcity effects from effects due to technological change third we test these hypotheses using statewide panel data of exploration and development drilling we find that the time paths of exploration development and total wells drilled are dominated by hotelling scarcity effects finally we offer an explanation for why fixed costs from exploration can make the contracting equilibrium in the mineral rights market efficient

can relaxation of beliefs rationalize the winner s curse an experimental study we use a second price common value auction called the maximal game to experimentally study whether the winner s curse wc can be explained by models which retain best response behavior but allow for inconsistent beliefs we compare behavior in a regular version of the maximal game where the wc can be explained by inconsistent beliefs to behavior in versions where such explanations are less plausible we find little evidence of differences in behavior overall our study casts a serious doubt on theories that posit the wc is driven by beliefs

modeling and analysis of an auction based logistics market we consider a logistics spot market where the transportation orders from a number of firms are matched with two types of carriers through a reverse auction in the spot market local carriers compete with in transit carriers that have lower costs in order to analyze the effects of implementing a logistics spot market on these three parties firms local carriers and in transit carriers and also the effects of various system parameters we develop a two stage stochastic model we first model the auction in a static setting and determine the expected auction price based on the number of carriers engaging in the auction and their cost distributions we then develop a continuous time markov chain model to evaluate the performance of the system in a dynamic setting with random arrivals and possible abandonment of orders and carriers by combining these two models we evaluate the performance measures such as the expected auction price price paid to the carriers distribution of orders between local and in transit carriers and expected number of carriers and orders waiting at the logistics center in the long run we present analytical and computational results related to the performance of the system and discuss operation of such a logistics spot market in turkey

search benefits and entitlement in a simultaneous analysis of unemployment duration and search intensity we estimate a non structural search model accounting explicitly for two features of the benefit system benefit level and time remaining until exhaustion of the entitlement period residual entitlement special attention is paid to the number of search contacts as an indicator for search intensity to assess the effect of the benefit level and residual entitlement on the number of search contacts we estimate a poisson model our results suggest that benefits work through a reduction of search efforts whereas residual entitlement is effective mainly through the reservation wage

private monitoring in auctions abstract we study infinitely repeated first price auctions in which a bidder only learns whether or not he won the object while repetition of the stage game equilibrium is the unique nash equilibrium in public strategies with patient bidders there are simple nash equilibria in private strategies that improve on bid rotation sequential rationality is appropriately captured by essentially perfect bayesian equilibrium epbe which ignores behavior after irrelevant histories our main result is the construction of epbea that improve upon bid rotation assuming symmetry the exclusionary schemes of skrzypacz and hopenhayn tacit collusion in repeated auctions j econ theory 114 2004 153 169 including asymptotically efficient ones are supported as epbea

auctions with contingent payments an overview i survey a literature on auctions with contingent payments that is auctions in which payments are allowed to depend on an ex post verifiable variable such as revenues in oil lease auctions based on demarzo et al 2005 i describe a partial ranking of auction revenues for auctions that differ in terms of contract forms pricing rules and seller commitment and why the revenue equivalence theorem does not apply even in an independent private values setup i discuss models that incorporate adverse selection moral hazard competition between auctioneers common values and the sale of multiple units

learning by drilling interfirm learning and relationship persistence in the texas oilpatch author s kellogg ryan m abstract production in many industries such as construction and heavy manufacturing relies on inputs from both lead firms and contractors these firms joint productivity often hinges on their ability to share information and coordinate activities suggesting that they have strong incentives to learn about each other s personnel procedures and expertise this learning differs from standard learning by doing in that it is relationship specific its benefits are not appropriable outside the relationship in which the learning takes place in this paper i empirically examine the importance of relationship specific learning using high frequency data from oil and gas drilling i find that the joint productivity of a lead firm and its drilling contractor is enhanced significantly as they accumulate experience working together this result is robust to other relationship specificities i also find that firms appear to recognize the benefits of joint experience controlling for other specificities lead firms are more likely to work with contractors with which they have substantial prior experience than those with which they have worked relatively little

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

optimal unemployment insurance in search equilibrium should unemployment benefits be paid indefinitely at a fixed rate or should the rate decline or increase over a worker s unemployment spell we examine these issues using an equilibrium model of search unemployment the model features worker firm bargaining over wages free entry of new jobs and endogenous search effort among the unemployed the main result is that an optimal insurance program implies a declining benefit sequence over the spell of unemployment numerical calibrations of the model suggest that there may be nontrivial welfare gains associated with switching from an optimal uniform benefit structure to an optimally differentiated system

secret reserve prices in a bidding model with a re sale option this paper presents an auction model in which the seller may choose not to sell in spite of receiving a bid above the announced reserve price such behavior is seen frequently in auctions yet would be suboptimal within most existing models here the seller uses resale to signal information about the object s value that could not be easily communicated via a reserve price announcement the model predicts that bids for reauctioned objects increase relative to initial bids and that on average prices of both reauctioned items and those sold at initial auction rise as delay in reauctioning increases copyright 1997 by american economic association

alternative bidding systems for leasing offshore oil experimental evidence alternative bidding systems for leasing offshore oil tracts the goal was to encourage participation by small companies by reducing the initial cost associated with the traditional bonus bid system we analyse the results of this unique experiment we find that although one alternative generated more bids in general the number of bids was no higher the winning bids were no lower and participation by small companies who already use joint bids was significantly lower than the traditional system which appears to be superior to these alternatives

collusion in private value ascending price auctions we investigate the effects of bid improvement rules and bidder value asymmetry on bidder collusion in experimental ascending price auctions without communication we find that the strict bid improvement rule and private values are not always sufficient to break collusion among well motivated bidders collusion still occurs as long as bidder gains from collusion are high

asymmetric information and adverse selection in mauritian slave auctions information asymmetry is a necessary prerequisite for testing adverse selection this paper applies this sequence of tests to mauritian slave auctions the theory of dynamic auctions with private and common values suggests that when an informed participant is known to be active uninformed bidders will be more aggressive and the selling price will be higher we conjecture that observable family links between buyer and seller entailed superior information and find a strong price premium when a related buyer purchased a slave indicative of information asymmetry we then test for adverse selection using sale motivation our results indicate large discounts on voluntary as compared to involuntary sales consistent with adverse selection the market anticipated that predominantly low productivity slaves would be brought to the market in voluntary sales copyright 2009 wiley blackwell

did installed base give an incumbent any measurable advantages in federal computer procurement this research examines the relative strength and significance of the status of incumbent contractor in federal computer procurement one finding as expected is that an agency is likely to acquire a system from an incumbent vendor another finding perhaps more interesting is that the in compatibility between a buyer s installed base and a potential system also influences the vendor choice a result that may be the first econometric measurement of the competitive effects of incompatibility an illustration of this thesis comes from ibm s experience new evidence shows however that ibm s apparent disadvantage with government agencies is largely due to incompatibilities in ibm s product line

strategic behaviour of incumbent firms in the uk abstract the main purpose of this paper is to examine the incidence of strategic behaviour in the uk by means of a questionnaire study performed across three broad manufacturing industries food electrical engineering and chemicals of the strategies which have received substantial theoretical attention r d and advertising appear widely used patenting pricing and excess capacity much less so vertical instruments such as purchasing policy also stand out as important but possibly only a minority of firms in our sample actively pursue strategic instruments

unemployment benefits and search effort in the uk labour market in this paper the impact that receipt of unemployment benefit has on job search effort is investigated utilizing data drawn from the 1984 labor force survey reduced form search effort equations are estimated conditional on the decision to seek work after controlling for potential selectivity bias personal characteristics and demand conditions those claiming benefit are shown to search more extensively than nonclaimants benefit claimants maintain a clear attachement to the labor market and appear more able to prolong search effort receipt of unemployment benefit increases the likelihood of contacting a job vacancy copyright 1991 by the london school of economics and political science

mixed strategy in oligopoly pricing evidence from gasoline price cycles before and under a timing regulation this paper studies oligopoly firms dynamic pricing strategies in a gasoline market before and after the introduction of a unique law that constrains firms to set price simultaneously and only once per day the observed gasoline pricing behavior both before and under the law is well captured by the edgeworth price cycle equilibrium in the maskin and tirole dynamic oligopoly model my results highlight the importance of price commitment in tacit collusion i also find evidence that the price leadership outcome under the law is better predicted by mixed strategies play than by alternative hypotheses

the unsupportable support price an analysis of collusion and government intervention in paddy auction markets in north india abstract this paper uses auction theory incorporating buyer asymmetry to analyse the structure of a small market for parmal paddy in north india and to assess the implications of alternative government policies our results suggest that two buyers collude in this market we are able to quantify the extent to which prices are depressed as a consequence such collusion probably characterizes many small grain markets in india government intervention in grain markets in india is pervasive and has in recent years led to its acquiring excessive food stocks and an unwillingness to enforce the support price using simulations we demonstrate that while reducing the support price for paddy may not have the desired effect of reducing government purchases a decrease in the percentage that millers are required to sell as levy to the government will

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

cartel enforcement with uncertainty about costs what cartel agreements are possible when firms have private information about production costs in order for a cartel agreement to work it must take into account the incentives for firms to misrepresent their cost information and it must provide sufficient reward so that no firm wishes to defect for private cost uncertainty we characterize the set of cartel agreements with side payments that can be supported as bayesian nash equilibria we show that if defection results in either cournot or bertrand competition the incentive problems in large cartels are severe enough to prevent the cartel from achieving the monopoly outcome in contrast with common cost uncertainty the incentive problems become less severe in large cartels allowing perfect collusion

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

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

do farmers value the environment evidence from a conservation reserve program auction the paper uses data from one conservation reserve program crp auction to elicit farmers attitudes toward the environment by analyzing their bids the crp pays farmers to remove chosen plots of land from agricultural production and put them to a conservation use an interesting aspect of this auction is that winners are determined by a combination of low bids and environmental scores of individual plots using decision theoretic approach to model this auction we show that farmers condition their bids on the strength of their environmental scores and that they value environmental benefits especially those that increase future soil productivity of their land

auctions markets and spectrum ownership comment on moreton and spiller abstract in their empirical study of the personal communications service auctions patrick s moreton and pablo t spiller have shown that the bidder behavior is consistent with most economists conceptions of competitive markets moreton and spiller also presented evidence that firms competing in these auctions were able to aggregate licenses thus offering some vindication for those economic theorists who championed simultaneous multiple round auctions on these issues their study brings new data to bear on important questions about auction design and public policy moreton and spiller however do not examine the costs of the secondary market in reallocating license blocks and its relationship to the exposure problem develop a specific model of government regulation or consider the effects of block size on bidding behavior these omissions limit the inferences and conclusions they claim for their study

buybacks with costly participation abstract posted price offers and first price auctions along with the multi unit discriminatory auction extension are two widely used mechanisms for allocating conservation contracts the choice between the two typically hinges on the trade off between the posted price s simplicity and the potential revenue gains of the auction in this paper we introduce a novel mechanism that attempts to bridge the gap between the performance of posted price offers and auctions a two price and lottery schedule combines the simplicity of the former with some of the flexibility of the latter using a model that incorporates agents cognitive and information costs of bidding we analyze how the ranking of allocative efficiency and cost effectiveness between the mechanisms varies as the wedge of participation costs increases when the number of bidders is endogenously determined by participation costs bid shading associated with a lack of competition in the auction compromises its cost effectiveness vis a vis the posted price and the lottery schedule we use data from three recent buybacks for fishing licenses conducted in maryland to calibrate our model and identify conditions under which the two price schedule outperforms the other mechanisms

auctions and bidding a primer maybe the contractor was right to think bid jobs are different but it is more likely that he suffered from too simple a view of what is involved in preparing a competitive bid our analysis will show that even an experienced estimator working in familiar terrain can lose money if he doesn t understand the subtleties of competitive bidding the phenomenon experienced by the painting contractor known as the winner s curse is just one of the surprising and puzzling conclusions that have been turned up by modern research into auctions another is the theoretical proposition supported also by some experimental evidence that for example a sealed bid treasury bill auction in which each buyer pays a price equal to the highest rejected bid would yield more revenue to the treasury than the current procedure in which the winning bidder pays the seemingly higher amount equal to his own bid there are also subtle results that demonstrate the equivalence of such apparently different institutions as the standard sealed bid auction in which the auctioneer seller sells the goods to the highest bidder for a price equal to his bid and the dutch auction in which the auctioneer seller begins by asking a high price and gradually lowers the price until

auctions with resale markets an application to u s forest service timber sales when bidders anticipate an opportunity for resale trade the value of winning an auction is determined in part by the option values of buying and selling in the secondary market one implication is that a bidder s willingness to pay at an auction increases with the expected level of competition between resale buyers empirical evidence from auctions of timber contracts supports this prediction and rejects standard models that ignore resale the estimated effect is smaller after policy changes expected to diminish the prevalence of resale additional evidence supports the predicted presence of a common value element introduced by the resale opportunity

performance responses to competition across skill levels in rank order tournaments field evidence and implications for tournament design tournaments are widely used in the economy to organize production and innovation we study individual data on 2775 contestants in 755 software algorithm development contests with random assignment the performance response to added contestants varies nonmonotonically across contestants of different abilities precisely conforming to theoretical predictions most participants respond negatively whereas the highest skilled contestants respond positively in counterfactual simulations we interpret a number of tournament design policies number of competitors prize allocation and structure number of divisions open entry and assess their effectiveness in shaping optimal tournament outcomes for a designer

competition among sellers in securities auctions we study simultaneous security bid second price auctions with com petition among sellers for potential bidders the sellers compete by designing ordered sets of securities that the bidders can offer as payment for the assets upon observing auction designs potential bidders decide which auctions to enter we characterize all symmet ric equilibria and show that there always exist equilibria in which auctions are in standard securities or their combinations in large markets the unique equilibrium is auctions in pure cash we extend the model for competition in reserve prices and show that binding reserve prices never constitute equilibrium as long as equilibrium security designs are not call options jel d44 d82 g10 in economic and financial markets rights to control and exploit assets with the potential to generate cash flows are often sold through auctions while in some auc tions the winner s future profits from the asset cannot be used as a basis for payment so only cash bids are possible in many cases it is possible to observe and verify the ex post cash flows this means that bidders can submit their bids in the form of securities the values of which are contingent on future cash flows from the asset securities auctions are common in the real world examples include government sales of oil leases lead plaintiff wireless spectrum and highway building auctions many other transactions though not formally auctions are similar to securities auc tions in nature examples include corporate takeovers intercorporate asset sales book publishing advertising and venture capital markets 1 in this paper we analyze equilibrium auction mechanisms when sellers compete for potential bidders by altering security designs of their auctions rather than reserve prices as in the prior literature specifically we consider an environment in which

march madness strategic behavior in ncaa basketball tournament betting pools abstract this paper uses data from the natural experiment of ncaa basketball tournament betting pools in a descriptive study of strategic behavior the observed behavior in these pools differs from equilibrium behavior in a robust manner bettors overback the heaviest favorites the size of this bias falls slightly in larger pools where the induced profit opportunities are higher than in smaller pools this indicates that a small number of players are adjusting their behavior to reflect the changing strategic situation while the aggregate behavior remains away from equilibrium

identification of standard auction models this paper presents new identification results for models of first price second price ascending english and descending dutch auctions we consider a general specification of the latent demand and information structure nesting both private values and common values models and allowing correlated types as well as ex ante asymmetry we address identification of a series of nested models and derive testable restrictions enabling discrimination between models on the basis of observed data the simplest model symmetric independent private values is nonparametrically identified even if only the transaction price from each auction is observed for richer models identification and testable restrictions may be obtained when additional information of one or more of the following types is available i the identity of the winning bidder or other bidders ii one or more bids in addition to the transaction price iii exogenous variation in the number of bidders iv bidder specific covariates while many private values pv models are nonparametrically identified and testable with commonly available data identification of common values cv models requires stringent assumptions nonetheless the pv model can be tested against the cv alternative even when neither model is identified

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

unemployment duration and individual heterogeneity a regional study this paper investigates the impact of individual heterogeneity and regional influences on unemployment duration utilizing cross section microeconomic data drawn from a representative random survey of individual job seekers for the english county of kent these individual level data are unique in that they provide information concerning the personal characteristics of job seekers alongside direct observations of both their reservation wages and job search behaviour such data are rare and to the authors knowledge have never before been utilized in a regional context thus the paper contributes to the empirical literature by analysing the extent to which individual heterogeneity and intra regional variation in labour market opportunities impact upon the observed distribution of unemployment duration s in particular the paper analyses the extent to which the duration of unemployment is determined by individual choice this is an important issue for the formation and evaluation of policy these result

bidding behaviour in ocs drainage auctions theory and evidence empirical economists frequently criticize game theoretic models of markets on the grounds that they fail to generate empirically testable hypotheses the complaint is that prices and quantities or entry decisions are explained using factors that are not observable to the econometrician such as private valuations and beliefs of agents the corollary to this argument is that the only way to proceed empirically is through experiments however this approach suffers from the problem that the experience of the subjects may be too limited and the compensation too small for them to perform the requisite optimizing calculations the objective of this paper is to discuss the above criticism of gametheoretic models in the context of our work on markets of offshore oil and gas leases in this case study one group of buyers is better informed about the unknown value of the leaae being sold that another group and the two groups can be identified game theoretic models of markets with informational asymmetries generate restrictions on the relative behaviour and performance of the two groups of buyers and some of these restrictions are empirically testable we examine them using bid and profit data more generally the work serves to illustrate a basic point about testing models of

bidding with securities auctions and security design we study security bid auctions in which bidders compete for an asset by bidding with securities that is they offer payments that are contingent on the realized value of the asset being sold the value depends on investment by the winner thus creating the possibility of moral hazard such auctions are commonly used both formally and informally in formal auctions the seller generally restricts bids to an ordered set such as an equity share or royalty rate by restricting the bids standard auction formats such as first and second price auctions can be used in informal settings with competing buyers the seller does not commit to a mechanism upfront rather bidders offer securities and the seller chooses the most attractive bid based on his beliefs ex post we characterize equilibrium payoffs and bidding strategies in this setting and show that an informal mechanism yields the lowest possible revenues across all mechanisms we also determine the optimal formal mechanism and show that the security design is more important than the auction format we show that the revenue equivalence principle that expected revenues are independent of the auction format holds if the set of permissible securities is ordered and convex such as equity otherwise it need not hold for example when bidders offer standard debt securities a second price auction is superior on the other hand if bidders compete on the conversion ratio of convertible debt a first price auction yields higher revenues finally we examine how different forms of moral hazard impact our results

optimal equity auctions with two dimensional types abstract we analyze the design and performance of equity auctions when bidder s valuations and opportunity costs are private information distributed according to an arbitrary joint density that can differ across bidders we identify for any incentive compatible mechanism an equivalent single dimensional representation for uncertainty we then characterize the revenue maximizing and surplus maximizing equity mechanisms and compare revenues in optimal equity and cash auctions unlike in cash auctions the adverse selection arising from bidders two dimensional types in equity auctions can lead to a global violation of the regularity condition which represents a maximal mismatch between incentive compatibility and maximization of revenue or surplus such mismatch can lead a seller to exclude bidders and demand a bidder specific stake from a non excluded bidder providing insights into when a firm should employ an auction and when it should just negotiate with a single bidder

naturally occurring markets and exogenous laboratory experiments a case study of the winner s curse we examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain using common value auction theory as our guide we identify naturally occurring settings in which one can test the theory experienced agents bidding in familiar roles do not fall prey to the winner s curse yet experienced agents fall prey to the winner s curse when bidding in an unfamiliar role we conclude that the theory predicts field behaviour well when one is able to identify naturally occurring field counterparts to the key theoretical conditions

are bid preferences benign the effect of small business subsidies in highway procurement auctions abstract bid preferences in procurement auctions allow firms from an identifiable group an advantage in bidding against unfavored firms while economic efficiency is expected to fall as a result of bid preferences government procurement costs may either increase or decrease depending on the competitive response of favored and unfavored firms this paper uses data from california auctions for road construction contracts where small businesses receive a 5 percent bid preference in auctions for projects using only state funds and no preferential treatment on projects using federal aid i show that while firms bidding behavior matches theoretical predictions procurement costs are 3 8 percent higher on auctions using preferences the higher procurement cost in preference auctions is attributed to reduced participation by lower cost large firms structural estimates of latent firm costs are then used to evaluate how efficiency and the division of surplus between firms and the government are impacted by bid preferences firm profits are 3 1 percent lower under bid preferences however this is overwhelmed by the efficiency loss due to reduced large firm participation the efficiency loss conditional on firm participation is estimated to represent around 0 1 percent of overall procurement costs including the adverse effect of preferences on the participation of large firms increases the estimated efficiency loss to 3 6 percent which represents 27 cents for each additional dollar awarded to small businesses through the program counterfactual simulations indicate that if participation were instead inelastic to bid preferences the 5 percent bid preference would be close to the optimal level

behavioral equilibrium in economies with adverse selection i propose a new solution concept behavioral equilibrium to study environments with players who are naive in the sense that they fail to account for the informational content of other players actions a behavioral equilibrium requires that i players have no incentives to deviate given their beliefs about the consequences of deviating ii these beliefs are consistent with the information obtained from the actual equilibrium play of all players and iii when processing this information naive players fail to account for the correlation between other players actions and their own payouncertainty i apply the framework to certain adverse selection settings and show that contrary to the received literature the adverse selection problem is exacerbated when naive players fail to account for selection more generally the main distinguishing feature of the framework is that in equilibrium beliefs about both fundamentals and strategies are jointly restricted consequently whether a bias may arise or not is determined endogenously in equilibrium jel c72 d82 a large literature presents evidence that psychological and cognitive biases aect people s be havior this evidence raises some questions what are the eects of these biases and can they persist at all in economic settings where people strategically interact with each other and have the opportunity to learn from their experience 1 in this paper i introduce a game theoretic equilibrium framework to study these questions in the context of a particular bias people s failure to take into account the informational content of other people s actions i apply the framework to a class of games that arises naturally in adverse selection settings and then show that the adverse selection

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

the existence and persistence of a winner s curse new evidence from the baseball field this study takes advantage of recent developments in the measurement and valuation of individual output in the baseball labor market to i reassess prior evidence that this market is afflicted by the winner s curse phenomenon and ii test whether bidders learn to avoid this curse over time though we find no evidence of negative average returns on player contracts for the earliest cohort of baseball free agents we conclude that teams in that era failed to efficiently discount their bids in accord with available information especially about risk what is more evidence from a larger sample of players signed in the late 1990s shows that teams have continued to overvalue inconsistent free agents and failed to limit their bids to conform to players lower values in small markets this is consistent with experimental evidence that finds bounded rational behavior when bidders are faced with complex valuation problems involving multiple elements

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

information returns and bidding behavior in ocs auctions 1954 1969 this paper examines federal auctions for leases on the outer continental shelf in the light of the predictions of the first price sealed bid common values model of auctions the authors find that the data strongly support the model for auctions in which one bidder is better informed than the other bidders the evidence for auctions in which bidders have noisy but qualitatively similar information is less conclusive but is consistent with a model in which each bidder does not know either the actual or potential number of bidders on a lease copyright 1987 by blackwell publishing ltd

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