efficiency and information aggregation in auctions the tension between allocative efficiency and information aggregation is explored in the context of an auction k identical objects of unknown quality are auctioned off to n bidders whose tastes affect their valuation of an object of given quality bidders receive a signal about the quality of the objects the k highest bidders get an object and pay a price equal to the k first highest bid we find conditions under which in the limit objects are allocated efficiently to those with the highest tastes and price converges in probability to the value of an object to the marginal taste type

convergence to efficiency in a simple market with incomplete information a model of trade with m buyers and m sellers is considered in which price is set to equate revealed demand and supply in a bayesian nash equilibrium each trader acts not as a price taker but instead misrepresents his true demand supply to influence price in his favor this causes inefficiency we show that in any equilibrium the amount by which a trader misreports is o 1 m and the corresponding inefficiency is o 1 m2 the indeterminacy and the inefficiency that is caused by the traders bargaining behavior in small markets thus rapidly vanishes as the market increases in size

existence of equilibrium in single and double private value auctions we show existence of equilibria in distributional strategies for a wide class of private value auctions including the first general existence result for double auctions the set of equilibria is invariant to the tie breaking rule the model incorporates multiple unit demands all standard pricing rules reserve prices entry costs and stochastic demand and supply valuations can be correlated and asymmetrically distributed for double auctions we show further that at least one equilibrium involves a positive volume of trade the existence proof establishes new connections among existence techniques for discontinuous bayesian games

market efficiency and the u s market for sulfur dioxide allowances focusing on the u s sulfur dioxide so2 allowance market from its inception in 1994 to 2009 we model allowance prices to determine the influence of market fundamentals on allowance price level and volatility we find evidence that the so2 market operates in ways that are not inconsistent with an efficient market prices that reflect marginal abatement costs after the first few years of the program but before a court decision that introduced significant uncertainty into the market in mid 2008 our empirical analysis finds that the so2 market similar to other emission markets studied in the literature can remain relatively inefficient for several years after launch we also find that market volatility increases in response to all types of communications from the administrator suggesting that the development of a formal communication strategy possibly similar to that used by central banks would reduce price volatility and increase the efficiency of the market

revenue and efficiency in multi unit uniform price auctions abstract this paper analyzes efficiency in a uniform price multi unit auction with a positive reservation price i demonstrate that the reservation price is an important policy tool that may increase efficiency or welfare in multi unit uniform price auctions i show that the higher the reservation price is the higher is the seller s revenue and the higher is the efficiency of a final allocation of units that could be attained in a multi unit uniform price auction the reservation price increases the bidder s equilibrium strategy in a specific way that is inherent to the uniform price auction thus the reservation price effect on efficiency is in contrast to other auction formats e g the reservation price decreases efficiency in the vickrey auction and single unit auctions with symmetric bidders therefore the main result can be added to the list of results from mechanism design and auction theory that fail to extend the single unit single dimensional context to the multi unit multi dimensional one

the relevance of a choice of auction format in a competitive environment we examine the relevance of an auction format in a competitive environment by comparing uniform and discriminatory price auctions with many bidders in a private values setting we show that if the number of objects for sale is small relative to the number of bidders then all equilibria of both auctions are approximately efficient and lead to approximately the same revenue when the number of objects for sale is proportional to the number of bidders then the particulars of the auction format matter all equilibria of the uniform auction are efficient while all of the equilibria of the discriminatory auction are inefficient the relative revenue rankings of the auction formats can go in either direction depending on the specifics of the environment these conclusions regarding the efficiency and revenue ranking are in contrast to the previous literature which focused on the case of independent information across agents

the loser s curse and information aggregation in common value auctions we consider an auction in which k identical objects of unknown value are auctioned off to n bidders the k highest bidders get an object and pay the k 1st bid bidders receive a signal that provides information about the value of the object we characterize the unique symmetric equilibrium of this auction we then consider a sequence of auctions a r with n r bidders and k r objects we show that price converges in probability to the true value of the object if and only if both k r and n r k r i e both the number of objects and the number of bidders who do not receive an object go to infinity

overbidding and inefficiencies in multi unit vickrey auctions for normal goods abstract i examine bid behavior in uniform price auctions and multi unit vickrey auctions without the standard quasilinearity restriction on bidder preferences instead of assuming quasilinearity i assume that bidders have weakly positive wealth effects i e the goods are normal goods my setting nests quasilinearity but also allows for budget constraints financial constraints and risk aversion i show that without the quasilinearity restriction truthful reporting is not a dominant strategy in the vickrey auction instead bidders truthfully demand for their first unit and weakly overreport their demand for later units the incentive to overreport demand means that the vickrey auction is generally inefficient this mirrors the well known demand reduction results in uniform price auctions moreover the efficiency ranking of the two auctions is ambiguous in fact there are cases where the uniform price auction is pareto efficient and the vickrey auction is pareto inefficient even if only one bidder has non quasilinear preferences

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

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

institutional corruption and election fraud evidence from a field experiment in afghanistan w e investigate the relationship between political networks weak institutions and election fraud during the 2010 parliamentary election in afghanistan combining i data on political connections between candidates and election officials ii a nationwide controlled evaluation of a novel monitoring technology and iii direct measurements of aggregation fraud we find considerable evidence of aggregation fraud in favor of connected candidates and that the announcement of a new monitoring technology reduced theft of election materials by about 60 percent and vote counts for connected candidates by about 25 percent the results have implications for electoral competition and are potentially actionable for policymakers jel c93 d02 d72 k42 o17

the effectiveness of english auctions abstract we study the performance of the english auction under different assumptions about the seller s degree of bayesian sophistication we define the effectiveness of an auction as the ratio between the expected revenue it generates for the seller and the expected valuation of the object to the bidder with the highest valuation total surplus we identify tight lower bounds on the effectiveness of the english auction for general private values environments and for private values environments where bidders valuations are non negatively correlated for example when the seller faces 12 bidders who the seller believes have non negatively correlated valuations whose expectations are at least as high as 60 of the maximal possible valuation an english auction with no reserve price generates an expected price that is more than 80 of the value of the object to the bidder with the highest valuation

mechanism choice and strategic bidding in divisible good auctions an empirical analysis of the turkish treasury auction market we propose an estimation method to bound bidders marginal valuations in discriminatory auctions using individual bid level data and apply the method to data from the turkish treasury auction market using estimated bounds on marginal values we compute an upper bound on the inefficiency of realized allocations as well as bounds on how much additional revenue could have been realized in a counterfactual uniform price or vickrey auction we conclude that switching from a discriminatory auction to a uniform price or vickrey auction would not significantly increase revenue moreover such a switch would increase bidder expected surplus by at most 0 02 percent

multiunit auctions in which almost every bid wins 1 introduction recent work suggests that multiunit auctions are much more complicated than their singleunit counterparts back and zender 1993 katzman 1995 noussair 1995 ausubel and cramton 1996 chakraborty 1997 engelbrecht wiggans and kahn 1998a because multiunit auctions are of such importance in economics and finance applications treasury auctions auctions for electromagnetic spectrum electric power privatizations procurement it becomes important for economic theorists to be able to make legitimate predictions about the performance of various commonly used auction forms this is an enormous task to date only certain natural but extreme cases have yielded to analysis for example restriction to auctions in which purchasers only want one or two units engelbrecht wiggans and kahn 1998a b katzman 1995 other results have been demonstrated asymptotically 1 a problematic case since expanding the number of bidders eliminates the very feature that generates a need for organized auctions a limited number of purchasers thus to have a comprehensive understanding of the behavior of multiunit auctions it will likely be necessary to devote attention to a large variety of cases as part of that process this paper examines a different sector of the parameter space one unexamined thus far but one that is readily amenable to solution by simple analytic techniques without resort to asymptotic approximations we consider auctions in which the number of units available is so large that every bid but one wins a unit we examine in the case of independent private values three different auctions the pay your bid auction section 3 and two different forms of uniform price auction sections 4 and 5 we find that when all but one bid wins the three auctions are efficient in section 6 we use a multiunit revenue equivalence result of engelbrecht wiggans 1988 to calculate their expected revenue by comparison to a vickrey auction vickrey 1961 1962 in most previously studied cases specifically those in which each bidder wins at most one object vickrey auctions turn out to be uniform price auctions in the case where all but one bid wins the vickrey auction differs significantly from uniform price auctions for example in the case of two bidders and a reservation price of zero efficiency implies that each bidder in the vickrey auction wins approximately half of the units nonetheless we show that all the revenue from the vickrey auction comes from one bidder the other pays nothing the analysis of the vickrey auction shows the importance of the reserve price in a multiunit setting we also find that the bids from the two forms of uniform price auction are identical providing some justification for the common practice of using one as a proxy for the other in theoretical work section 8 shows that this equivalence continues to hold for some cases beyond the pure private values setting of the rest of the paper of course the case where every bid but one wins is an extreme example nonetheless as we briefly argue in the final section the equivalence of the two uniform price auctions in this case is still significant since the extreme example we consider is in important ways biased against similarity of the two auction forms the final section also provides some conjectures about when the two forms of uniform price auction are likely to yield similar bids 9 summary in this paper we have used the case of auctions in which almost every bid wins as a natural laboratory for comparison of different auction rules we have seen three useful points the first is extremely simple if a player is guaranteed to win a unit the reserve price plays a central role in determining revenue in single unit auctions with more than one bidder reserve prices play no role as long as they are below the support of the bidders valuations in contrast when some bidder is assured of winning at least one unit no matter what that bidder bids we need a lower limit on the bids to keep revenue from drifting to minus infinity

from data to model and back to data a bond portfolio management problem abstract the bond portfolio management problem is formulated as a multiperiod stochastic program using interest rate scenarios the scenarios are sampled from the binomial lattice from a black derman toy model the paper analyzes the sensitivity of the solution of the resulting large scale mathematical program with respect to the model inputs the numerical results are for the italian bond market

bilateral trading and incomplete information price convergence in a small market abstract we study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value in addition to this seller with private information there are two identical buyers and another seller whose valuation is commonly known to be in between the two possible valuations of the seller with private information we consider an infinite horizon game with simultaneous one sided offers and simultaneous responses we construct one particular pbe of the game and show that as the discount factor goes to 1 prices in all transactions converge to the same value we then show that this is the case with any stationary equilibrium of the game that is the asymptotic outcome is unique across all stationary equilibria

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

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 for initial sale of annual catch entitlement we use a laboratory experiment calibrated to a representative new zealand fishery to assess three sealed bid multi unit demand auction mechanisms under consideration for allocating quota for species being introduced into the quota management system these auctions allocate the k units to the k highest bids but prices are determined according to discriminative kth price and k 1st price rules in our experiment the auctions are equally efficient but revenue is highest in the discriminative auction and lowest in the k 1st price auction results are robust to industry subjects and subjects are responsive to the across unit bidding incentives present in multi unit demand auctions

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

electoral accountability and corruption evidence from the audits of local governments we show that political institutions affect corruption levels we use audit reports in brazil to construct new measures of political cor ruption in local governments and test whether electoral account ability affects the corruption practices of incumbent politicians we find significantly less corruption in municipalities where mayors can get reelected mayors with reelection incentives misappropriate 27 percent fewer resources than mayors without reelection incentives these effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punish ment is lower overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician s corrupt behavior jel d72 k42 017

revenue equivalence in multi object auctions abstract the theory of auctions suggests that under certain conditions seemingly different methods for auctioning a single object will result in the same expected price this result extends quite easily to the case of more than one object