bidding behavior in the longer term refinancing operations of the european central bank evidence from a panel sample selection model abstract this paper analyzes individual bidding data of the longer term refinancing operations ltros of the european central bank we investigate how banks bidding behavior is related to a series of exogenous variables including collateral costs interest rate expectations market volatility and to individual bank characteristics like country of origin size and experience a specific feature of these auctions is that the number and composition of bidders varies over time therefore we estimate panel sample selection models to control for a bank s endogenous participation decision we find that bidding strategies depend on the banks attributes yet different bidding behavior generally does not translate into differences concerning bidder success there is evidence for the winner s curse effect in ltros indicating a common value component in banks demand for longer term refinancing

two models of bid taker cheating in vickrey auctions vickrey second price sealed bid auctions have attractive theoretical properties but standard first price sealed bidding is far more common explanations of the rarity of vickrey auctions rely on concern about revelation of private information and on fear of cheating the authors present two models of bid taker cheating a static game theoretic model and a reputation based model of repeated auctions in the first an honest bid taker will not choose a vickrey auction in the second a trusted bid taker who cheats when it pays eventually destroys his or her reputation and the trust on which the use of vickrey auctions depends copyright 1995 by university of chicago press

auctions of heterogeneous objects abstract simultaneous sealed bid auctions of heterogeneous objects are analyzed each bidder s reservation value for an object depends upon the other objects he obtains bidders reservation values are common knowledge in simultaneous first price auctions the set of walrasian equilibrium allocations contains the set of pure strategy nash equilibrium allocations which in turn contains the set of strict walrasian equilibrium allocations hence pure strategy nash equilibria when they exist are efficient mixed strategy nash equilibria may be inefficient in simultaneous second price auctions any efficient allocation can be implemented as a pure strategy nash equilibrium outcome if a walrasian equilibrium exists journal of economic literature classification numbers d44 d51

ambiguity aversion and the preference for established brands we propose that ambiguity aversion as introduced in the literature on decision making under uncertainty drives a preference for established brands in multiattribute choices among branded alternatives established brands are those for which belief in quality is held with greater confidence even if specific attributes might be inferior to those of competing less established brands in five experiments we examine the role of ambiguity aversion in the preference for dominated established brands we first show a correlation between ambiguity aversion revealed through choices among monetary lotteries and the preference for established brands we then show that the preference for established brands is enhanced when ambiguity aversion is made more salient in unrelated preceding lottery choices thus ambiguity aversion carries across choices in addition ambiguity aversion and the preference for established brands are both enhanced when subjects anticipate that others will evaluate their lottery choices finally ambiguous information about brand attributes tends to increase the preference for established brands

does ambiguity aversion survive in experimental asset markets although a number of theoretical studies explain empirical puzzles in finance with ambiguity aversion it is not a given that individual ambiguity attitudes survive in markets in fact despite ample evidence of ambiguity aversion in individual decision making most studies find no or only limited ambiguity aversion in experimental financial markets even when they exclude arbitrage we argue that ambiguity effects in markets depend on market feedback and on a sufficiently strong bias toward ambiguity among the participants accordingly we find significant ambiguity effects in low feedback call markets for assets that provoke high ambiguity aversion but no ambiguity effects in high feedback double auctions

walrasian equilibrium with gross substitutes in this paper we study the problem of efficient production and allocation of indivisible objects among a set of consumers we assume that the agents preferences depend on the bundle of objects and the quantity of money they consume furthermore we assume that preferences are quasilinear in money and that agents have a large endowment of money with indivisibilities it is well known that many familiar properties of the utility functions fail to ensure existence in their striking analysis of the matching problem kelso and crawford 5 introduce the gross substitutes gs condition which ensures the non emptiness of the core we propose two new conditions and show that with quasilinearity they are equivalent article id jeth 1999 2531 available online at http www idealibrary com on

auctioning many divisible goods we study the theory and practical implementation of auctioning many divisible goods with multiple related goods price discovery is important not only to reduce the winner s curse but more importantly to simplify the bidder s decision problem and to facilitate the revelation of preferences in the bids simultaneous clock auctions are especially desirable formats for auctioning many divisible goods we examine the properties of these auctions and discuss important practical considerations in applying them jel d44

auction design for the efficient allocation of service capacity under congestion we consider the problem of efficiently allocating the capacity of a number of service facilities prone to congestion to a set of users with private information regarding their willingness to pay for different combinations of throughput versus latency auction mechanisms can be used to schedule the service capacity of available facilities however the interdependency of users valuations implies that simple uniform price adjustment processes e g tatonnement either fail to effectively clear or are subject to strategic manipulation in this paper we propose an iterative auction design and show that i it is efficient i e the auction closes with the allocation of service that maximizes the social welfare and ii it is strategy proof that is it is a dominant strategy for users to truthfully reveal their demand for service capacity throughout the auction

using auctions to price employee stock options the case of zions bancorporation esoars the first empirical analysis of zions bancorporation s 2006 and 2007 auctions of employee stock option appreciation rights securities esoars this study examined 1 the impact of auction rules on bidding strategies and allocations 2 the efficiency of the auction clearing prices and 3 the value gap between esoars auction clearing prices and various model based estimates it found that the design features of the auctions e g ending rules significantly affected bidding strategies but not final allocations which remained highly concentrated it also found that the clearing prices 1 displayed high price elasticities of demand suggesting efficient price discovery and 2 were low relative to some but not all model based estimates these findings suggest design improvements that might benefit auctions of other illiquid derivatives e g banks troubled assets currently being considered by the u s government

asymmetric effects of favorable and unfavorable information on decision making under ambiguity most daily decisions involve uncertainty about outcome probabilities arising from incomplete knowledge i e ambiguity we explore how the addition of partial information affects these types of choices using theoretical and empirical methods our experiments in both gain and loss domains demonstrate that when such information supports a favorable outcome it strongly increases valuation of an ambiguous financial prospect however when information supports an unfavorable outcome it has significantly less impact we find that two mechanisms drive this asymmetry first unfavorable information decreases estimates of a good outcome occurring but also reduces aversive uncertainty these factors act in opposition minimizing the effects of unfavorable information second when information can be subjectively interpreted unfavorable information is less likely to be integrated into evaluations our findings reveal mechanisms not captured by traditional models of decision making under uncertainty and highlight

an institutional critique of intergovernmentalism most intergovernmentalist analyses of european integration focus on treaty bargaining among european union member governments recent articles also have examined everyday decision making through power index analysis an approach that asserts that a government s ability to influence policy is a function of all possible coalitions in the council of ministers to which it is pivotal this approach suffers from two major weaknesses first it fails to take into account the policy preferences of governments it overestimates the influence of governments holding extreme preferences and underestimates that of more centrist governments second power index analysis fails to consider the important roles of the commission of the european communities and the european parliament in legislative processes today s procedures affect the mix of agenda setting and veto power and this has systematic effects on policy outcomes if intergovernmentalism is to explain choices made during treaty rounds it must take into account these legislative dynamics

incentive compatible and stable trade mechanisms on networks abstract we study a network of buyers and sellers where each seller owns an indivisible object and has no incentive to keep it while each buyer has a downward sloping demand curve which is private information only the connected buyer seller pairs can engage in trade we search for trade mechanisms that are efficient strategy proof bilateral trade stable and individually rational in general there does not exist a trade mechanism simultaneously satisfying these properties the tension between strategy proofness and bilateral trade stability is generated by the intersection between sets of competitors of a buyer at different sellers such intersections often allow the buyer to manipulate via demand reductions the prices paid in the network the observed tension can be resolved if and only if the underlying network is cycle free in such a case there is a unique trade mechanism which satisfies our four properties a generalized vickrey auction

ambiguity aversion and comparative ignorance decisions under uncertainty depend not only on the degree of uncertainty but also on its source as illustrated by ellsberg s observation of ambiguity aversion in this article we propose the comparative ignorance hypothesis according to which ambiguity aversion is produced by a comparison with less ambiguous events or with more knowledgeable individuals this hypothesis is supported in a series of studies showing that ambiguity aversion present in a comparative context in which a person evaluates both clear and vague prospects seems to disappear in a noncomparative context in which a person evaluates only one of these prospects in isolation

managing online auctions current business and research issues the internet s computational power and flexibility have made auctions a widespread and integral part of both consumer and business markets though online auctions are a multi billion dollar annual activity with a growing variety of sophisticated trading mechanisms scientific research on them is at an early stage this paper analyzes the current state of management science research on online auctions it develops a broad research agenda for issues such as the behavior of online auction participants the optimal design of online auctions the integration of auctions into the ongoing operation of firms and the use of the data generated by online auctions to inform future trading mechanisms these research areas will draw from applied and theoretical work spanning management science economics and information systems

the strategy structure of some coalition formation games in coalitional games with side payments the core predicts which coalitions form and how benefits are shared the predictions however run into difficulties if the core is empty or if some coalitions benefit from not blocking truthfully these difficulties are analyzed in games in which an a priori given collection of coalitions can form as the collection of pairs of buyer seller in an assignment game the incentive properties of the core and of its selections are investigated in function of the collection furthermore the relationships with vickrey clarke groves mechanisms are drawn

clinching auctions with online supply abstract auctions for perishable goods such as internet ad inventory need to make real time allocation and pricing decisions as the supply of the good arrives in an online manner without knowing the entire supply in advance in this work we consider a multi unit model where buyers have global budget constraints and the supply arrives in an online manner our main contribution is to show that for this setting there is an individually rational incentive compatible and pareto optimal auction that allocates these units and calculates prices on the fly without knowledge of the total supply we do so by showing that the adaptive clinching auction satisfies a supply monotonicity property finally while our main technical result concerns multi unit supply we propose a formal model of online supply that captures scenarios beyond multi unit supply and has applications to sponsored search

protecting the winner second price versus oral auctions abstract in oral auctions unlike sealed bid second price auctions the winner never reveals his reservation price we investigate bidders strategies in the two auctions when third parties can exploit information revealed by the auction when exploitation is likely oral auctions are more efficient than sealed bid second price auctions and preferred by all participants

brands as beacons a new source of loyalty to multiproduct firms abstract this study provides evidence that a multiproduct firm s portfolio of products affects consumer purchase decisions about each of the firm s products the authors present a theory that explains this empirical regularity the theory involves revising the information set of consumers to include the profile of multiproduct firms the authors show that revision of the information set in this way introduces a new source of consumer loyalty and explains interesting empirical regularities in consumer behavior for example consumers are loyal to a multiproduct firm even when it does not offer a product that matches their preferences better than a product of competing firms the authors estimate the model and test its implications using panel data on television viewing choices the estimated model also allows for state dependence parameters and unobserved heterogeneity the empirical results support the model and its implications the model offers a parsimonious framework for brand extension strategies and

selection into auctions for risky and ambiguous prospects we study experimentally the selection into first price sealed bid auctions for a risky or an ambiguous prospect most subjects chose to submit a bid for the risky prospect leading to thinner markets for the ambiguous prospect transaction prices for both prospects were equal although subjects expected the ambiguous markets to be smaller evidence of a positive correlation between risk and ambiguity aversion suggests that the ambiguous markets were populated by relatively risk tolerant bidders a control experiment with selection in a simple choice task shows that subjects correctly anticipate the effects of selection on market size and risk attitudes jel c91 d44 d81

menus of price quantity contracts for inducing the truth in environmental regulation abstract many authors have proposed mechanisms to induce regulated polluting firms to truthfully reveal their private information this paper proposes an alternative scheme in which the regulator offers each firm a menu of linear price quantity contracts faced with this menu each firm s dominant strategy is to truthfully report its private information and self select the contract that is ex post efficient the proposed menu schedule that is more elastic than the firm s residual marginal damage function engenders a positive quantity effect thereby counterbalancing the firm s incentive to misreport prompted by the linearity of price due to its built in price quantity structure the scheme performs as designed regardless of the elasticities of marginal damage and demand functions

vickrey dutch procurement auction for multiple items we consider a setting where there is a manufacturer who wants to procure multiple items from a set of suppliers each of whom can supply one or more of these items bundles we design an ascending price auction for such a setting which implements the vickrey clarke groves outcome and truthful bidding is an ex post nash equilibrium our auction maintains non linear and non anonymous prices throughout the auction this auction has a simple price adjustment step and is easy to implement in practice as offshoots of this auction we also suggest other simple auctions in which truthful bidding is not an equilibrium by suppliers which may be suitable where incentives to suppliers are not a big concern computer simulations of our auction show that it is scalable for the multi unit case and has better information revelation properties than its descending auction counterpart

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

the asymmetric effect of discount retraction on subsequent choice this article examines the subsequent impact of a temporary price discount on brand preference after the promotion is retracted theorizing that price salience has an impact on price sensitivity we propose that the effects of retracting a discount depend on the promoted brand s regular price quality positioning in a first experiment in which we track consumer choices across a sequence of choice occasions we show that retracting a discount posted by a higher quality higher price brand is detrimental to that brand in contrast a discount posted by a lower quality lower price brand is capable of enduringly diverting consumers away from high end brands a second experiment relies on process measures to provide evidence for the underlying price salience mechanism a third experiment tests our hypotheses with real incentives and offers additional support for our price salience theory by testing its most peculiar behavioral implication

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

enlargement processes and distributional conflicts the politics of discriminatory membership in the european union this paper examines discriminatory membership in the european union from a game theoretical perspective i argue that discriminatory membership enables the enlargement of international organizations with heterogenous member states eu members impose discriminatory measures on new members to redistribute enlargement gains from new members to particularly negatively affected eu members as to render expansion pareto efficient the empirical findings of a probit analysis on the eu accession negotiations and outcomes of all five eu enlargement rounds support the theoretical claim the eu grants acceding states restricted membership rights if distributional conflicts emerge moreover the candidate s bargaining power and the possibility of alternative compensation schemes influence the enlargement outcomes

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

an efficient dynamic auction for heterogeneous commodities this paper proposes a new dynamic design for auctioning multiple heterogeneous commodities generalizing earlier work that treated identical objects an auctioneer wishes to allocate one or more units of each of k heterogeneous commodities to n bidders the auctioneer announces a vector of current prices bidders report back quantities demanded at these prices and the auctioneer adjusts the prices units are credited to bidders at the current prices as their opponents demands decline and the process continues until every commodity market clears bidders rather than being required to behave as price takers are permitted to strategically exercise their market power nevertheless with pure private values the proposed auction yields walrasian equilibrium prices an efficient outcome results as from a vickrey clarke groves mechanism but bidders are only required to evaluate their demands along a one dimensional path of prices rather than reporting their utilities over the entire k dimensional consumption set the auction is also more transparent and potentially simpler for bidders to understand and has the advantage of assuring the privacy of the upper portions of bidders demands theoretically the new auction provides a new foundation for convergence to walrasian equilibrium in an exchange economy practically it provides an efficient method for simultaneously auctioning two or more related types of securities for example three month and six month treasury bills it is also potentially useful for auctioning multiple types of communications spectrum for example licenses for paired and unpaired spectrum

raising rivals cost in multi unit auctions abstract the objective many telecom regulators want to achieve when they decide to auction spectrum is that acquiring firms pay a market price based on the opportunity cost principle the simultaneous ascending auction may fail in this respect as it provides bidders with an opportunity to engage in strategic demand reduction this paper asks whether the combinatorial clock auction cca fares better in this respect we show that the answer to this question depends on the objectives bidders have if bidders have only the slightest preference to raise rivals cost they will use the opportunities the cca provides them to engage in strategic demand expansion this is even the case when the clock phase ends with excess demand

the community trap liberal norms rhetorical action and the eastern enlargement of the european union discipline 3 i begin my search for an explanation with liberal intergovernmentalism the most prominent and promising rationalist account of the major turning points in the history of european integration this perspective accounts plausibly for most of the enlargement preferences of the member states and explains why the association of central and eastern european countries to the european community ec was the initial outcome of the bargaining process among them it fails however to account for the community s decision to go beyond association and offer these countries full membership this puzzle is solved through a sociological perspective in which enlargement is understood as the expansion of international community if the eu is conceived of

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

the effect of false name bids in combinatorial auctions new fraud in internet auctions we examine the effect of false name bids on combinatorial auction protocols false name bids are bids submitted by a single bidder using multiple identifiers such as multiple e mail addresses the obtained results are summarized as follows 1 the vickrey clarke groves vcg mechanism which is strategy proof and pareto efficient when there exists no false name bid is not falsename proof 2 there exists no false name proof combinatorial auction protocol that satisfies pareto efficiency 3 one sufficient condition where the vcg mechanism is false name proof is identified i e the concavity of a surplus function over bidders

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

exploring the vcg mechanism in combinatorial auctions the threshold revenue and the threshold price rule abstract we explore interesting potential extensions of the vickrey clarke groves vcg rule under the assumption of players with independent and private valuations and no budget constraints first we apply the vcg rule to a coalition of bidders in order to compute the second price of the coalition then we introduce and formulate the problem of determining that partition of players into coalitions which maximize the auctioneer s revenue in the case whereby such coalitions take part to a vcg auction each one as a single agent in particular we provide an integer linear formulation of this problem we also generalize this issue by allowing players to simultaneously belong to distinct coalitions in the case that players valuation functions are separable finally we propose some applications of these theoretical results for instance we exploit them to provide a class of new payment rules and to decide which bids should be defined as the highest losing ones in combinatorial auctions

a human experiment on inventory decisions under supply uncertainty abstract controlled human experiments are adopted in this paper to investigate the impact of supply uncertainty on buyers inventory management the experiments aim at assessing the impact of one specific source of supply chain uncertainty namely stochastic lead times on inventory holdings and the extent of the bullwhip effect three experimental treatments are run within the framework of the beer game manipulating variability in demand and in lead times results confirm that the bullwhip effect arises in all experimental treatments and that the variance of orders is higher under stochastic lead times analysis of players behaviour in the course of the game suggests that players react to higher uncertainty by holding fewer inventories a behaviour consistent with the predictions of some psychological models of choice under ambiguity

international actors on the domestic scene membership conditionality and socialization by international institutions international relations scholars increasingly debate when and how international institutions influence domestic policy this examination of ethnic politics in four baltic and east european countries during the 1990s shows how european institutions shaped domestic policy and why these institutions sometimes failed comparing traditional rational choice mechanisms such as membership conditionality with more socialization based efforts i argue that conditionality motivated most behavior changes but that socialization based efforts often guided them furthermore using new case studies statistics and counterfactual analysis i find that domestic opposition posed far greater obstacles to socialization based methods than it did to conditionality when used alone socialization based methods rarely changed behavior when they did the domestic opposition was usually low and the effect was only moderate in contrast incentive based methods such as membership conditionality were crucial in changing policy as domestic opposition grew membership conditionality was not only increasingly necessary to change behavior but it was also surprisingly effective many panel and seminar participants have offered useful comments on this work but my thanks goes in particular to michael zurn alexandra gheciu frank schimmelfennig jeff checkel robert keohane steven wilkinson robert putnam milada vachudova and the editors and anonymous reviewers of international organization i also thank princeton university press for allowing me to use material from my book ethnic politics in europe the power of norms and incentives the usual caveats apply this research was funded by a grant from the danish research academy former forskerakademiet and by travel support from the weatherhead center for international affairs at harvard

brand effects on choice and choice set formation under uncertainty this paper examines the effects of brand credibility a central concept in information economics based approaches to brand effects and brand equity on consumer choice and choice set formation we investigate the mechanisms through which credibility effects materialize namely through perceived quality perceived risk and information costs saved the credibility of a brand as a signal is defined as the believability of the product position information contained in a brand which depends on consumer perceptions of the willingness and ability of firms to deliver what they have promised the choice set is defined as the collection of brands that have a nonzero probability of being chosen among those actually available for choice in a given context furthermore we study the impact of brand credibility on the variance of the stochastic component of utility not only do choice model parameters capture the impact of systematic utility differences on choice probabilities but also the magnitude of this systematic impact is moderated by the relative importance of the stochastic utility component in preference we term this moderation phenomenon preference discrimination which we conceptualize as the decision makers capacity to effectively discriminate between products utilities in choice situations we estimate a discrete choice model of brand choice set formation and preference discrimination on experimental data in two categories juice and personal computers and find strong evidence for brand credibility effects and differential mechanisms through which brand credibility s impact materializes on brand choice conditional on choice set choice set formation and preference discrimination

on ascending vickrey auctions for heterogeneous objects abstract we construct an ascending auction for heterogeneous objects by applying a primal dual algorithm to a linear program that represents the efficient allocation problem for this setting the auction assigns personalized prices to bundles and asks bidders to report their preferred bundles in each round a bidder s prices are increased when he belongs to a minimally undersupplied set of bidders this concept generalizes the notion of overdemanded sets of objects introduced by demange gale and sotomayor for the one to one assignment problem under a submodularity condition the auction implements the vickrey clarke groves outcome we show that this type of condition is somewhat necessary to do so when classifying the ascending auction literature in terms of their underlying algorithms our auction fills a gap in that literature we relate our results to various ascending auctions in the literature

sequential rules for house allocation with price restrictions this paper considers a housing market with price restrictions on such markets the existence of a unique minimum rationing equilibrium price vector has been established for each preference profile on a general preference domain that contains almost all preference profiles this vector can be used as a key ingredient in a direct and strategy proof allocation mechanism the main contribution of this paper is to provide two price sequences one with increasing prices and one with decreasing prices that both terminate to a minimal rationing equilibrium price vector in a finite number of steps these sequences are demonstrated to play key roles in an english auction and a dutch auction respectively for the considered housing market with price restrictions less

the importance of ordering in sequential auctions to date the largest part of literature on multi unit auctions has assumed that there arek homogeneous objects being auctioned where each bidder wishes to win exactly one or all ofk units these modeling assumptions have made the examination of ordering in sequential auctions inconsequential the aim of this paper is to introduce and highlight the critical influence that ordering can have on the efficiency of an auction we study a buyer who outsources via sequential 2nd price auctions two heterogeneous jobs and faces a diverse set of suppliers with capacity constraints

are policymakers ambiguity averse we investigate the ambiguity preferences of a unique sample of real life policymakers at the paris un climate conference cop21 we find that policymakers are generally ambiguity averse using a simple design we are moreover able to show that these preferences are not necessarily due to an irrational behaviour but rather to intrinsic preferences over unknown probabilities exploring the heterogeneity within our sample we also show that the country of origin and the degree of quantitative sophistication affect policymakers attitudes towards compound risk but not towards ambiguity robustness results are obtained in a lab experiment with a sample of university students

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

an ascending vickrey auction for selling bases of a matroid consider selling bundles of indivisible goods to buyers with concave utilities that are additively separable in money and goods we propose an ascending auction for the case when the seller is constrained to sell bundles whose elements form a basis of a matroid it extends easily to polymatroids applications include scheduling allocation of homogeneous goods and spatially distributed markets among others our ascending auction induces buyers to bid truthfully and returns the economically efficient basis unlike other ascending auctions for this environment ours runs in pseudopolynomial or polynomial time furthermore we prove the impossibility of an ascending auction for nonmatroidal independence set systems

auction design for the allocation of emission permits in the presence of market power to the extent that emission permits have been allocated using market mechanisms this has been done using a sealed bid auction design typically with discriminatory prices however several authors have recommended the ascending auction format basically two competing ascending auction designs have been suggested the standard ascending auction with clock or demand schedules or an alternative ascending clock implementation of vickrey pricing the latter design was introduced as a response to problems of bid shading under the sealed bid and the standard ascending auction format the purpose of this paper is to investigate the allocation of permits under these two alternative mechanisms the auction process and the resulting market outcome in the presence of oligopolistic competition are simulated in this setting it is not obvious that bid shading is the optimal strategy under the standard design nor is it obvious that sincere bidding is the optimal strategy under the alternative ascending auction design the alternative auction format makes it less costly to pursue a strategy to increase market shares through the acquisition of emission permits thus increasing the competitor s costs leading to overbidding as the optimal strategy

multi unit auctions with budget limits abstract we study multi unit auctions for bidders that have a budget constraint a situation very common in practice that has received relatively little attention in the auction theory literature our main result is an impossibility there is no deterministic auction that 1 is individually rational and dominant strategy incentive compatible 2 makes no positive transfers and 3 always produces a pareto optimal outcome in contrast we show that ausubel s clinching auction satisfies all these properties when the budgets are public knowledge moreover we prove that the clinching auction is the unique auction that satisfies all these properties when there are two players this uniqueness result is the cornerstone of the impossibility result few additional related results are given including some results on the revenue of the clinching auction and on the case where the items are divisible

the politics of common knowledge ideas and institutional change in wage bargaining domestic economic institutions change through processes of conflict and bargaining why do the strongest groups in such conflicts ever change their minds about the acceptability of institutional arrangements they once opposed drawing on the cases of ireland in 1986 87 and italy in 1989 93 this article demonstrates how the process of common knowledge creation between employers and unions changed the course of negotiations over national wage bargaining institutions common knowledge creation happens when existing institutions are in crisis the institutional experimentation that follows such crises characterized by deep uncertainty places a premium on persuasive argument the ideas most likely to serve as the basis for newly common knowledge will have analytical and distributive appeal to both unions and employers and they must be ratified in public agreements which i call common knowledge events common knowledge events establish new social facts which can change the payoffs associated with different institutional outcomes this can lead even powerful actors to accept institutions they had previously opposed the author thanks marius busemeyer mary louise culpepper keith darden orfeo fioretos archon fung peter hall andrew martin cathie jo martin victoria murillo kathleen thelen and gunnar trumbull along with three anonymous reviewers and the editors of io for comments and conversations that improved this article ben ansell and vikram siddarth provided valuable research assistance financial support from the john f kennedy school of government and the weatherhead center for international affairs at harvard university is gratefully acknowledged any remaining errors are my own

a dominant strategy asset market mechanism abstract asset markets institutions that reallocate goods among agents with heterogeneous endowments demands and valuations abound in the real world but have received little attention in mechanism and market design assuming constant marginal private values and known endowments and maximum demands we provide a detail free dominant strategy asset market mechanism that allocates efficiently or close to efficiently respects traders individual rationality constraints ex post and never runs a deficit if it does not allocate efficiently it sacrifices the trades that under efficiency would involve the lowest value trader who efficiently would be allocated a positive amount the mechanism always allocates the quantity traded efficiently and permits clock implementation as the market becomes large the mechanism s efficiency loss converges to zero under natural conditions

the english auction with differentiated commodities abstract we study economies with indivisibilities that satisfy the gross substitutes gs condition we define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest walrasian prices this procedure is a generalization of the auction studied by g demange d gale and m j sotomayor polit econ 94 1986 863 872 in our auction truthful revelation of demand is a perfect bayesian equilibrium if the smallest walrasian prices correspond to the vickrey clarke groves payments however no dynamic auction can reveal sufficient information to implement the vickrey mechanism if all gs preferences are allowed journal of economic literature classification numbers d4 d44 d5 d51

an experimental analysis of auctions with interdependent valuations abstract we study experiments in an auction setting with interdependent valuation groups of three players receive private signals and then bid for a single indivisible item valuations for the item differ within groups and depend asymmetrically on a bidder s own and other bidders signals theoretically the english auction yields efficient allocations while other standard auction formats fail to do so consistent with equilibrium predictions we find that an english auction yields significantly more efficiency than a second price sealed bid auction we also study the seller s expected revenue and the bidders expected profits and find that the experimental results are close to the theoretical predictions

obviously strategy proof mechanisms what makes some strategy proof mechanisms easier to understand than others to address this question i propose a new solution concept a mechanism is obviously strategy proof osp if it has an equilibrium in obviously dominant strategies this has a behavioral interpretation a strategy is obviously dominant if and only if a cognitively limited agent can recognize it as weakly dominant it also has a classical interpretation a choice rule is osp implementable if and only if it can be carried out by a social planner under a particular regime of partial commitment i fully characterize the set of osp mechanisms in a canonical setting with one dimensional types and transfers a laboratory experiment tests and corroborates the theory

constructing the international foundations of e commerce the eu u s safe harbor arrangement much recent international relations scholarship has argued that states are unable to control e commerce so that private actors are coming to play a dominant role however this body of literature fails to account for emerging hybrid institutions in which states create general frameworks of rules which are then implemented by private actors this article examines a prominent example of such an institution the eu u s safe harbor arrangement in the field of privacy and sets out an alternative explanation of state private actor relations in the sphere of e commerce it shows how safe harbor had its origins in efforts by the european union eu and united states to mitigate problems of interdependence that threatened to undermine the principles of order on which their regulatory systems were based safe harbor reflects neither the eu nor u s approach but rather a novel blend of state and private regulation the article demonstrates the vital role of argument and persuasion in identifying safe harbor as a solution and in negotiating its particulars it finds that conventional game theoretic accounts of bargaining are unable to explain the negotiation of safe harbor and argues that constructivist approaches should pay more attention to how argument can disclose new possibilities of action

an efficient multi unit ascending auction we provide an ascending auction that yields an e cient outcome when there are many identical units for sale and bidders have interdependent values and downward sloping demand our ascending auction both extends and generalizes ausubel s 1997 and yields the same outcome as perry and reny s 2000 generalization of vickrey s 1961 sealed bid auction there are two key components to our auction bidders are permitted both to

auction institutional design theory and behavior of simultaneous multiple unit generalizations of the dutch and english auctions historically english and dutch auctions have been used for the exchange of single objects such as works of art or single lots of a good such as produce fish or cut flowers where these institutions have been used for the exchange of multiple units such as the australian wool auction using english rules successive lots of the good are sometimes sold sequentially at auction in some but not all instances this is because the goods are not identical even though the various lots may be close substitutes see penny burns 1985 where the goods are accepted universally as being homogeneous as in the securities markets multiple units are often commonly auctioned simultaneously in the securities industry orders are batched for simultaneous execution in multiple unit auctions in what are referred to as call markets that is the security is called for auction at a particular point in time this type of market is used on the stock exchanges of austria belgium france germany and israel some of these are verbal and some are sealed bid auctions although the u s organized exchanges are predominantly continuous rather than call markets except that call markets are used each day to open trading in each listed security there is a growing number of exceptions such as the proliferation since 1984 of auction preferred stock goldman sachs and co october 1984 and money market preferred stock lehman brothers july 1984 we now have dutch auction rate transferable securities called darts stated rate auction preferred stock or straps and many more after the initial subscription offering of this type of security the market is called every 49 days to reset the preferred dividend rate using a multiple unit auction the exchange of shares and the dividend determination is based on the array of stated dividend rates at which existing holders and potential new holders are willing to sell and or buy corresponding quantities the dividend rate and exchange of shares every 49 days is executed using the uniform price or competitive sealed bid mechanism vernon l smith et al 1980 the discussion to follow will be confined to this sealed bid form of the call market call markets provide temporal consolidation of trade orders or other forms of expressing the desire to buy and sell by comparison with continuous trading call markets offer both advantages and disadvantages robert a schwartz 1988 pp 442 6 the cited advantages include low cost of operating the exchange information aggregation and presumed pricing efficiency price stability individual trades which are thought to have a small impact on price reduced price uncertainty and finally nondiscriminatory pricing however there are offsetting disadvantages 1 the market is inaccessible except at the time of call 2 no bid offer contract or price information is available until the results of the call are announced and 3 there is transaction uncertainty because a submitted bid offer may be too low high to execute inside the supply demand cross these conditions are only partially alleviated if there is a secondary market between calls these disadvantages may be significant in september 1988 the wall street journal published an article on the failure of a call market for the auction rate preferred stock economic science laboratory university of arizona tucson arizona this material is based upon work supported by the national science foundation under grant no ses 8320121

modularity and greed in double auctions abstract designing double auctions is a complex problem especially when there are restrictions on the sets of buyers and sellers that may trade with one another the goal of this paper is to develop a modular approach to the design of double auctions by relating it to the exhaustively studied problem of designing one sided mechanisms with a single seller or alternatively a single buyer we consider several desirable properties of a double auction feasibility dominant strategy incentive compatibility the still stronger incentive constraints offered by a deferred acceptance implementation exact and approximate welfare maximization and budget balance for each of these properties we identify sufficient conditions on two one sided algorithms one for ranking the buyers one for ranking the sellers and on a method for their composition into trading pairs which guarantee the desired property of the double auction our framework also offers new insights into classic double auction designs such as the vcg and mcafee auctions with unit demand buyers and unit supply sellers

protecting democracy in europe and the americas especially since the end of the cold war the council of europe ce and the organization of american states oas have acted to protect democracy in their member states from erosion or reversals with ce policies more robust than those in the americas what explains this variation i develop an argument focus ing on institutional permeability or the extent to which those organizations are acces sible to nonstate actors permeability consists of three dimensions range of third parties allowed access level of decision making at which access is granted and transparency of io information to those third parties higher levels of permeability are likely to produce higher levels of constraint on state behavior through increas ing levels of precision and obligation in international rules and practices alterna tive explanations summarized as regional democracy norms domestic democratic lock in interests and the power of stable democracies cannot explain the variation in multilateral democracy protection more broadly this article suggests that democratizing ios by allowing ever greater access to nonstate actors is likely to result in stronger more constraining international rules even in areas where states most jealously guard their sovereignty such as the nature of their domestic political institutions

implementing efficient multi object auction institutions an experimental study of the performance of boundedly rational agents abstract we study three alternative implementations of the vickrey multi unit demand auction vickrey s original static sealed bid auction and two dynamic ausubel auctions with and without public dropout information reported during the auction although implemented by a weaker solution concept behavior in the dynamic vickrey auction with the public dropout information comes significantly closer to the theoretical prediction of sincere bidding bidding one s valuations than either the static vickrey auction or the dynamic auction without dropout information this suggests a possible tradeoff between the simplicity and transparency of a mechanism and the strength of its solution concept when agents are still learning and or when players are not fully rational drawing on results from related single unit and multi unit demand auctions and the results of a new single unit demand auction experiment we provide important insights into the behavioral mechanism underlying the superior performance of the ausubel auction with feedback information

a dispositional theory of reputation costs politicians frequently turn to reputational arguments to bolster support for their proposed foreign policies yet despite the prevailing belief that domestic audiences care about reputation there is very little direct evidence that publics care about reputation costs and very little understanding of how we propose a dispositional theory of reputation costs in which citizens facing ill defined strategic situations turn to their core predispositions about foreign affairs in order to weigh competing reputational dimensions employing a diverse array of methodological tools from vignette based survey experiments to automated text analysis we show that the mass public has a taste for reputation but understands it in fundamentally different ways with hawks concerned about the negative reputational consequences of inconsistency and doves equally concerned with the negative reputational consequences of belligerence and interventionism in illustrating how reputation costs are in our heads our findings offer both good and bad news for theories of reputation in ir

competitive equilibrium in an exchange economy with indivisibilities abstract we analyze an exchange economy in which i all commodities except money are indivisible ii agents preferences can be described by a reservation value for each bundle of indivisible objects and iii all agents are price takers we obtain a necessary and sufficient condition under which market clearing prices exist implications for market mechanisms are discussed journal of economic literatureclassification numbers d51 c78

the economics of missing markets information and games part 1 out of equilibrium beliefs and out of equilibrium behaviour david m kreps the role of common knowledge assumptions in game theory adam brandenburger and eddie dekel repeated games a survey h sabourian information dynamics and equilibrium frank hahn part 2 the economics of parallel research partha dasgupta strategy variables and theories of industrial organization christopher doyle bargaining theory david canning imperfect competition and international trade k gatsios part 3 missing markets consequences and remedies david m newberry rational expectations information and asset markets margaret bray decision making in the presence of risk mark j machina part 4 theoretical modelling of banks and bank runs luca anderlini optimal multi unit auctions eric maskin and john riley labour contract theory tim worrall part 5 intertemporal general equilibrium models timothy j kehoe sunspots stephen burnell an introduction to nonlinear dynamics and its application to economics david kelsey part 6 some micro and macro implications of inventories j p thomas keynes s liquidity preference theory a suggested reinterpretation louis makowski

optimal voting rules we study dominant strategy incentive compatible dic and deterministic mechanisms in a social choice setting with several alternatives the agents are privately informed about their preferences and have single crossing utility functions monetary transfers are not feasible we use an equivalence between deterministic dic mechanisms and generalized median voter schemes to construct the constrained efficient optimal mechanism for an utilitarian planner optimal schemes for other welfare criteria such as say a rawlsian maximin can be analogously obtained

the structure and dynamics of eu federalism this article analyzes european union eu politics through the lens of comparative federalism the article assesses the contributions that rationalist and constructivist approaches can make to the analysis of eu federalism focusing on two broad questions first what explains shifts in authority from the state i e member states to the federal i e eu level second what explains the degree to which the federal government constrains state discretion this article develops testable hypotheses based on the rationalist and constructivist perspectives and presents a set of initial plausibility probes the article shows that there is considerable room for dialogue between rationalist and constructivist perspectives and together they can provide a more comprehensive explanation for the dynamics of eu federalism

risky choice in the limelight this paper examines how risk behavior in the limelight differs from that in anonymity in two separate experiments we find that subjects are more risk averse in the limelight however risky choices are similarly path dependent in the different treatments under both limelight and anonymous laboratory conditions a simple prospect theory model with a path dependent reference point provides a better explanation for subjects behavior than a flexible specification of expected utility theory additionally our findings suggest that ambiguity aversion depends on being in the limelight that passive experience has little effect on risk taking and that reference points are determined by imperfectly updated expectations

multi item auctions a collection of items is to be distributed among several bidders and each bidder is to receive at most one item assuming that the bidders place some monetary value on each of the items it has been shown that there is a unique vector of equilibrium prices that is optimal in a suitable sense for the bidders in this paper we describe two dynamic auction mechanisms one achieves this equilibrium and the other approximates it to any desired degree of accuracy

umbrella branding as a signal of new product quality an example of signalling by posting a bond i present a signalling model in which a multiproduct firm can use its reputation as a bond for quality by using a brand name for an established product when it introduces a new experience good as out of equilibrium beliefs are specified a false signal may be taken to imply that both the established and the new product are of low quality in contrast the absence of a signal leaves open the possibility that one of the two products is of high quality hence the signal can be credible without excessive sunk costs as long as the bond posted is sufficiently large

multi item vickrey english dutch auctions abstract assuming that bidders wish to acquire at most one item this paper defines a polynomial time multi item auction that locates the vcg prices in a finite number of iterations for any given starting prices this auction is called the vickrey english dutch auction and it contains the vickrey english auction sankaran j k 1994 on a dynamic auction mechanism for a bilateral assignment problem math soc sci 28 143 150 and the vickrey dutch auction mishra d parkes d 2009 multi item vickrey dutch auctions games econ behav 66 326 347 as special cases by means of numerical experiments it is showed that when the auctioneer knows the bidders value distributions the vickrey english dutch auction is weakly faster than the vickrey english auction and the vickrey dutch auction in 89 percent and 99 percent respectively of the investigated problems a greedy version of the vickrey english dutch auction is demonstrated to perform even better in the simulation studies

efficient sequential bargaining suppose that a seller and a buyer have private valuations for a good and that their respective utilities from a trading mechanism are given by us and ub these utilities are determined by the valuation for the good by whether a trade occurs and by the price which is paid consider the problem of maximizing e us 1 ub for some weight in the unit interval it is shown in this article that if is sufficiently close to zero or one then the maximum value of this objective function attainable by a static revelation mechanism can be arbitrarily closely approximated by equilibria of the sequential bargaining games in which only a single player makes offers that is the welfare bound implied by the revelation principle is virtually attainable in offer counteroffer bargaining the main condition needed for this result is a monotone hazard rate assumption about the distribution of types a class of examples is presented in which the result holds for all i e the entire ex ante pareto frontier

effects of ambiguity in market experiments prior studies have shown that individuals are averse to ambiguity in probability many decisions are however made in market settings where an individual s decision is influenced by decisions of others participating in the market in this paper we extend the previous research to evaluate the effect of ambiguity on individual decisions and the resulting market price in market settings we therefore examine an important issue whether ambiguity effects persist in the face of market incentives and feedback two different market organizations the sealed bid auction and the double oral auction were employed the subjects in the experiments were graduate business students and bank executives our results show that the individual bids and market prices for lotteries with ambiguous probabilities are consistently lower than the corresponding bids and market prices for equivalent lotteries with well defined probabilities the aversion to ambiguity therefore does not vanish in market settings our results provide insights into what a manager can expect in bidding situations where the object of the sale oil leases mineral rights involves ambiguity in probability due to for example lack of information or prior experience the results may also be useful in understanding some phenomena in insurance and equity markets

pricing and allocation for quality differentiated online services we explore the problem of pricing and allocation of unique one time digital products in the form of data streams we look at the short term problem where the firm has a capacitated shared resource and multiple products or service levels we formulate the allocatively efficient generalized vickrey auction gva for our setting and point out the computational challenges in determining the individual discriminatory transfer payments we propose an alternative uniform price computationally efficient revenue maximizing knapsack formulation called the multiple vickrey auction mva while not incentive compatible the mva mechanism achieves bounded posterior regret and can be solved in real time it has the added benefit of realizing imputed commodity prices for the various services a feature lacking in the discriminatory gva approach for service providers that are concerned about the incentive compatibility but want imputed service prices we suggest a maximal mva mmva uniform pricing scheme that trades off revenue maximization for allocative efficiency for sake of completeness we discuss the properties of a first price pay your bid scheme while np hard and not incentive compatible this formulation has the perceived benefit of cognitive simplicity on the parts of sellers and bidders

low revenue equilibria in simultaneous ascending bid auctions low revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market these outcomes are generated as perfect equilibria of ascending bid multiunit auctions we show that these equilibria are possible under mild conditions conditions that are likely to prevail in many situations where auction formats have recently been adopted we argue that these equilibria could explain the low revenues of some recent auctions and discuss potential remedies to eliminate low revenue equilibria