efficient and durable decision rules with incomplete information we compare six concepts of efficiency for economies with incomplete information depending on the stage at which individuals welfare is evaluated and on whether incentive constraints are recognized an example is shown in which an incentive efficient decision rule may be unanimously rejected by the individuals in the economy we define durable decision rules which can resist such unanimous rejection and show that efficient durable decision rules exist

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

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

multiple round timber auction design and simulation this paper presents a multiple round timber auction simulation developed in order to study various configurations of auction design in this study simultaneous sequential timber auctions are modelled and analysed using agent based simulation technology as there are many individual items in the auction to be sold the auction designer defines several rounds that are sequential at pre defined intervals at each round the auction designer announces several simultaneous auctions since bidders are offered different items at each round a mathematical linear programing model for selecting the best set of items to bid for is presented different bidding patterns are simulated and compared in various setup configurations the most advanced of these strategies are adaptive and use agent learning capability the comparisons include the success rate of winning the auction and the winning price per m3 this study suggests an efficient bidding pattern for bidders to bid in order to achieve to their goal and increase their profit similarly in order to increase profit the auctioneer i e the government needs to control several auction parameters including the number of auctions per year the lot size the auction periodicity and the number of bidders this study also suggests parameters configurations that to maximise revenue for the auctioneer

ex ante incentive efficient trading mechanisms without the private valuation restriction abstract the private valuation assumption found in most trading mechanism design papers rules out markets whose valuation structure generates externalities between traders this paper characterizes the set of ex ante incentive efficient trading mechanisms for a large class of markets that do admit such externalities and for bilateral trade markets establishes the impossibility of a first best solution across a class of trading problems employing uniform priors and linear valuation structures this paper also compares levels of market efficiency for varying numbers of traders

women ask for less only from men evidence from bargaining in the field abstract data from a tv show provide the opportunity to study gender differences and gender interaction effects in bargaining with sizable stakes a proposer and a responder who is selected by the proposer bargain over a fixed pie proposers are in a stronger bargaining position because they have a positive outside option and information on the size of the pie while responders have neither the matching between male proposers and female responders stands as the most favorable for proposers women as responders demand less only from male proposers which explains the difference in earnings

testing for price anomalies in real estate auctions this paper reports on the results of an auction sale of 83 condominium apartment units in new jersey at the auction every unit was hammered down but unknown to the 2 348 registered bidders 40 of the sales fell through prices in the subsequent sale of condominium units in face to face negotiations resulted in identical units selling for 13 less than they fetched at auction and the discount was largest for those units hammered down early in the auction these results are inconsistent with the usual predictions from the theory of common value auctions and suggest that uninformed bidders in this auction may have been the subject of a winner s curse which generated considerable profit for the seller this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from ano this abstract was borrowed from another version of this item

on the welfare effects of a duty free zone abstract the analysis extends and corrects the results of an earlier paper by hamada two problems are analyzed 1 how is location of production affected by opening up of a free zone taking into account different kinds of trade barriers and zones implications for production consumption and welfare in a number of different cases are analyzed 2 what are the effects of capital inflow either into the zone or into the host country our results show that both types of capital inflow diminish welfare and welfare diminishes comparatively more when imported into the zone repatriated income as well as its composition is explicitly incorporated

structural estimation of the affiliated private value auction model we consider the structural estimation of the affiliated private value apv model in first price sealed bid auctions the model allows for bidders individual efficiencies and opportunity costs while permitting dependence among bidders private values through affiliation we establish the nonparametric identification of the apv model characterize its theoretical restrictions and propose a computationally convenient and consistent two step nonparametric estimation procedure for estimating the joint private value distribution from observed bids using simulated bid data we provide a step by step guide on how to implement our procedure and show the good behavior of our estimator in small samples

quantifying the cost of excess market thickness in timber sale auctions abstract in auctions with endogenous entry theory predicts that too many potential bidders or the excess market thickness may actually decrease the seller s expected revenue and the social welfare generated by the auction this paper proposes a computationally easy method for estimating the optimal number of potential bidders in timber sale auctions with endogenous entry and an uncertain number of active bidders and then quantifies the cost of excess market thickness it is found that the welfare loss due to the excess market thickness is moderate in this market

collusion under asymmetric information when applied to groups the revelation principle postulates a bayesian nash behavior between agents their binding agreements are unenforceable or the principal can prevent them at no cost we analyze instead a mechanism design problem in which the agents can communicate between themselves and collude under asymmetric information we characterize the set of implementable collusion proof contracts both when the principal offers anonymous and nonanonymous contracts after having isolated the nexi and the stakes of collusion we proceed to a normative analysis perform some comparative statics discuss our concept of collusion proofness and provide some insights about transaction costs in side contracting

strategic liquidity supply and security design we study how securities and issuance mechanisms can be designed to mitigate the adverse impact of market imperfections on liquidity in our model asset owners seek to obtain liquidity by selling claims contingent on privately observed future cash flows liquidity suppliers can be competitive or strategic in the optimal trading mechanism associated to an arbitrary given security issuers with low cash flows sell their entire holdings of the security while issuers with high cash flows are typically excluded from trade by designing the security optimally issuers can avoid exclusion altogether we show that the optimal security is debt because of its low informational sensitivity debt mitigates the adverse selection problem furthermore by pooling all issuers with high cash flows debt also reduces the ability of a monopolistic liquidity supplier to exclude them from trade in order to better extract rents from issuers with lower cash flows

the principal agent relationship with an informed principal ii common values in many circumstances a principal may have relevant private information when she proposes a contract to an agent we analyze such a principal agent relationship as a noncooperative game the principal proposes a contract which is accepted or rejected by the agent who for most of our analysis has no private information the contract is executed if accepted otherwise the reservation allocation takes effect this allocation may be determined by a pre existing contract which the principal by her proposal is attempting to renegotiate or it may simply be the no trade point in this paper we assume that the principal s information directly affects the agent s payoff before solving the game we discuss pareto efficiency with asymmetric information we define an incentive compatible allocation to be weakly interim efficient wie if there exists no alternative incentive compatible allocation that both parties prefer for all possible beliefs that the agent might have about the principal s private information type we show that any wie allocation is interim efficient ie for some beliefs the rothschild stiglitz wilson rsw allocation relative to the reservation allocation l is the allocation that maximizes the payoff of each type of principal within the class of incentive compatible allocations that guarantee the agent at least the utility he gets from a irrespective of his beliefs about the principal s type the equilibrium set of the contract proposal game consists of the allocations that weakly pareto dominate the rsw allocation thus there is a unique equilibrium outcome if and only if the latter is ie and the equilibrium outcome is the rsw allocation itself after characterizing the equilibrium allocations we study those that are renegotiation proof when either the principal or the agent leads the renegotiation we then compare our contract proposal game which is a signaling model with its screening counterpart we conclude by extending our results to the case in which the agent as well as the principal has private information under the assumption of quasi linear preferences

material flow accounting in an irish city region 1992 2002 abstract this paper aims to measure raw material inputs and waste flows in an irish city region in order to analyse i whether there was absolute dematerialisation in the particular case study over the period 1992 2002 and ii whether material consumption and waste generation were decoupled from economic growth and increases in disposable income over the same period it was found that the selected material flow indicators showed no evidence of absolute dematerialisation over the given study period although more recent evidence at the national level suggests that a decline in construction activity and extraction of non metallic minerals has resulted in an absolute reduction in material consumption and it is likely that this will be mirrored at the system boundary level it was found that domestic material consumption dmc per capita and direct material input dmi per capita increased at a faster rate than domestic processed output dpo per capita and direct material output dmo per capita between 1992 and 2002 which indicates relative decoupling of consumption from waste generation in addition it was found that there was relative decoupling of consumption and waste generation from disposable income growth over the study period finally it was found that average dmc and dmi figures for the selected case study were lower than the national averages but broadly similar to results for other city regions in the european union eu on a methodological note it was concluded that material flow accounting mfa for city regions in ireland is constrained due to a lack of disaggregated data for material flows with the exception of local waste data and it is recommended that bottom up analysis should be used to complement disaggregated top down data

bargaining with asymmetric information an empirical study of plea negotiations this paper empirically investigates how sentences to be assigned at trial impact plea bargaining the analysis is based on the model of bargaining with asymmetric information by bebchuk 1984 i provide conditions for the nonparametric identification of the model propose a consistent nonparametric estimator and implement it using data on criminal cases from north carolina employing the estimated model i evaluate how different sentencing reforms affect the outcome of criminal cases my results indicate that lower mandatory minimum sentences could greatly reduce the total amount of incarceration time assigned by the courts but may increase conviction rates in contrast the broader use of non incarceration sentences for less serious crimes reduces the number of incarceration convictions but has a very small effect over the total assigned incarceration time i also consider the effects of a ban on plea bargains depending on the case characteristics over 20 percent of the defendants who currently receive incarceration sentences would be acquitted if plea bargains were forbidden

the price effects of increased competition in auction markets bidding theory predicts low er selling winning bids higher buying winning bids as numbers of bidders incre ase alternative versions predict that winning bids fall rise with the second order statistic the maximum order statistic or 1 n the authors test these pre dictions using data on underwriters spreads on tax exempt bonds offshore oil t racts and national forest timber they estimate winning bids using general vari ables for the product and dummies for 1 2 11 bidders in all cases mor e bidders meansignificantly lower selling winning bids the expected maximum order statistic fits better than either the second order statistic or1 n in te n out of twelve cases copyright 1987 by mit press

timber sale auctions with random reserve prices this paper analyzes first price sealed bid auctions of standing timber organized by the french forest service office national des forets onf a feature of these auctions is that they are held wi

on the failure of core convergence in economies with asymmetric information in interim economies with asymmetric information we show that the coarse core of wilson 1978 does not converge to price equilibrium allocations as the economy is replicated this failure of core convergence is a basic consequence of asymmetric information and extends to any reasonable notion of either interim core or price equilibrium

optimal domestic regulation under asymmetric information and international trade a simple general equilibrium approach we investigate the design of domestic incentive regulations in a small economy opened to trade and its implications for international specialization and for trade openness to remain welfare improving more specifically we append to an otherwise standard 2 2 heckscher ohlin model of a small open economy a continuum of intermediate sectors producing nontradable goods used in tradable sectors those goods are produced by privately informed regulated firms asymmetric information induces distortions with general equilibrium impacts the small economy becomes relatively richer in the informationally sensitive factor so that asymmetric information might reverse trade patterns free trade is pareto dominated by autarky when it exacerbates agency distortions

introduction to the special issue on the econometrics of auctions 2004 jean jacques la ont s contributions are important in many elds in economics yet he still managed to spare some of his time to help to trigger the scienti c quality uplift inthe empirical analysis of auctions papers in this special issue continue this project and usejean jacques papers in the various dimensions of his work in theory econometric identi cation estimation and empirical results of auctions this is why we wish to dedicate this special issueto the memory of jean jacques la ont and to his so formidable capacity of doing and inspiringexcellent research in applied and theoretical economics in estimating risk aversion from ascending and sealed bid auctions jingfeng lu andisabelle perrigne rely on multiple source of data t o identify the risk aversion of bidders previousresearch using experimental or eld data had proven the importance of risk aversion albeit ina parametric way risk aversion is di cult to identify non parametrically in the private valueparadigm if information consists only in observed bids athey and haile 2007 in particular the in uence of risk aversion on observed bids of di erent organizational forms for the auction is

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

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

all stage strong correlated equilibrium abstract a strong correlated equilibrium is a strategy profile that is immune to joint deviations different notions of strong correlated equilibria were defined in the literature one major difference among those definitions is the stage in which coalitions can plan a joint deviation before ex ante or after ex post the deviating players receive their part of the correlated profile in this paper we show that an ex ante strong correlated equilibrium is immune to deviations at all stages thus the set of ex ante strong correlated equilibria of moreno wooders games econ behav 17 1996 80 113 is included in all other sets of strong correlated equilibria

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

incentive schemes as a signaling device abstract this paper considers a model of moral hazard where the principal has private information for instance in an organizational setting the firm may be better informed about the profitability of a sales area for which it seeks to employ a new sales representative we show how this information asymmetry may lead to a game of signaling which can mute incentives

constructing physical input output tables for environmental modeling and accounting framework and illustrations abstract a physical input output table piot provides a framework in which all the physical flows associated with an economy can be recorded this makes it a valuable tool for environmental economic modeling and accounting during the 1990 s piots were constructed for a number of countries subsequently the piot and related physical supply and use tables have been taken up in the system of environmental and economic accounting un united nations 2003 system of environmental and economic accounting united nations new york this paper reviews piots for the netherlands germany denmark italy finland and the european union these studies applied the basic and extended piot frameworks this paper elaborates these frameworks with packaging residuals wastes and emissions recycling and stock changes in order to create a full piot the production process of the extended and full piot is split into structural and auxiliary production processes modeling applications and ways of deriving environmentally relevant information from the full piot are illustrated using a numerical example

empirical testing of auction theory given the state of affairs in auction theory there is at least one model for instance to support any position one would care to take concerning the revenue of sealed bid vs open auctions it should not come as a surprise that a fair amount of empirical work in auctions is underway this paper reports the results of some recently completed research i first discuss papers in which the predictions being tested derive directly from the pure theory of auctions and then papers in which the predictions arise out of an application of auction theory to a related institution

dynamic bargaining with transaction costs a buyer and seller alternate making offers until an offer is accepted or someone terminates negotiations the seller s valuation is common knowledge but the buyer s valuation is known only by the buyer impatience to reach an agreement comes from two sources the traders discount future payoffs and there are transaction costs of bargaining equilibrium behavior involves either immediate trade delayed trade or immediate termination depending on the size of the gains from trade and the relative bargaining costs this contrasts with the pure discounting model where termination never occurs and the pure transaction cost model where delayed trade never occurs

interim third party selection in bargaining abstract third party intervention can reduce the risk of conflict in situations where the bargaining failure is due to asymmetric information in this paper i consider the selection of a third party in a two person bargaining problem where each disputant has private information about its relative strength or weakness for a class of problems i find that the disputants choose the third party that is best for the strong type but worst for the weak type due to the incentive of each disputant to avoid seeming weak to their adversary the selected third party s intervention entails a higher ex ante chance of conflict than intervention by any other alternative this paper shows how the process of interim third party selection can have important consequences for the outcome of a third party intervention in bargaining

bargaining under incomplete information this paper presents and analyzes a bargaining model of bilateral monopoly under uncertainty under the bargaining rule proposed the buyer and the seller each submit sealed offers that determine whether the good in question is sold and the transfer price the nash equilibrium solution of this bargaining game implies an offer strategy of each party that is monotonic in its own reservation price and depends on its assessment of the opponent s reservation price issues of relative bargaining advantage and efficiency are examined for a number of special cases finally we discuss the appropriateness of the nash solution concept

gifts as economic signals and social symbols gift giving has often puzzled economists especially because efficient gifts like cash or giving exactly what a person asks for seem crass or inappropriate it is shown in a formal game theoretic model that gifts serve as signals of a person s intentions about future investment in a relationship and inefficient gifts can be better signals other explanations for the inefficiency of gift giving are advanced and some stylized facts about gift giving practices are described many of which are consistent with the signaling view of gifts

bayesian inference in structural second price common value auctions structural econometric auction models with explicit game theoretic modeling of bidding strategies have been quite a challenge from a methodological perspective especially within the common value framework we develop a bayesian analysis of the hierarchical gaussian common value model with stochastic entry introduced by bajari and hortacsu a key component of our approach is an accurate and easily interpretable analytical approximation of the equilibrium bid function resulting in a fast and numerically stable evaluation of the likelihood function we extend the analysis to situations with positive valuations using a hierarchical gamma model we use a bayesian variable selection algorithm that simultaneously samples the posterior distribution of the model parameters and does inference on the choice of covariates the methodology is applied to simulated data and to a newly collected dataset from ebay with bids and covariates from 1000 coin auctions we demonstrate that the bayesian algorithm is very effici

protectionary bias in agriculture a pure economic argument abstract empirical evidence suggests that the agricultural sector in the developed countries has enjoyed a greater degree of protection than the import competing manufacturing sectors usually this is attributed to strong farm lobbies and hence on political factors we provide a theoretical model and a possible explanation of this phenomenon based on purely economic arguments two importables are accommodated in a three good three factor model of trade and production one is a labor intensive manufacturing good and the other is an agricultural commodity this captures the trade pattern of a typical industrialized country with an agricultural sector such as europe and the usa we show that uniform tariffs in agriculture and labor intensive manufacturing will definitely hurt the land owners in real terms and may reduce their absolute return hence if there has to be protection it has to be biased in favor of agriculture

optimal robust bilateral trade risk neutrality a risk neutral seller and buyer with private information bargain over an indivisible item we prove that optimal robust bilateral trade mechanisms are payoff equivalent to non wasteful randomized posted prices

alternating offer bargaining with two sided incomplete information i study alternating offer bargaining games with two sided incomplete information about the players discount rates for both perfect bayesian equilibrium and a rationalizability style notion i characterize the set of expected payoffs which may arise in the game i also construct bounds on agreements that may be made the set of expected payoffs is easy to compute and incorporate into applied models my main result is a full characterization of the set of perfect bayesian equilibrium payoffs for games in which the distribution over the players discount rates is of wide support yet is in a weak sense close to a point mass distribution i prove a lopsided convergence result each player cannot gain from a slight chance that she is a strong type but the player can suffer greatly if there is a slight chance that she is a weak type

adverse selection and renegotiation in procurement as was shown by dewatripont optimal long term contracts are generally not sequentially optimal the parties ex post renegotiate them to their mutual advantage this paper fully characterizes the equilibrium of a simple two period procurement situation and studies the extent to which renegotiation reduces ex ante welfare i a central result is that like in the non commitment case the second period allocation is optimal for the principal conditionally on his posterior beliefs about the agent ii the first period allocation exhibits an increasing amount of pooling when the discount factor grows iii with a continuum of types it is never optimal to induce full separation the paper also analyzes whether renegotiated long term contracts yield outcomes resembling those under either unnegotiated long term contracts or a sequence of short term contracts and it links the analysis with the multiple unit durable good monopoly problem

the dynamics of incentive contracts the paper studies a simple two period principal agent model in which the principal updates the incentive scheme after observing the agent s first period performance the agent has superior information about his ability the principal offers a first period incentive scheme and observes some measure of the agent s first period performance cost or profit which depends on the agent s ability and unobservable first period effort the relationship is entirely run by short term contracts in the second period the principal updates the incentive scheme and the agent is free to accept the new incentive scheme or to quit the strategies are required to be perfect and updating of the principal s beliefs about the agent s ability follows bayes rule the central theme of the paper is that the ratchet effect leads to much pooling in the first period first for any first period incentive scheme there exists no separating equilibrium second when the uncertainty about the agent s ability is small the optimal scheme must involve a large amount of pooling the paper also gives necessary and sufficient conditions for the existence of partition equilibria and looks at the effect of cost uncertainty

efficiency enhancing signalling in the samaritan s dilemma suppose an altruistic person a is willing to transfer resources to a second person b if b comes upon hard times if b anticipates that a will act in this manner b will save too little from both agents point of view this is the samaritan s dilemma this paper shows that the undersaving result is mitigated if we relax the standard assumption of complete information because if a is uncertain about how big b s need for support is b will have an incentive to signal that he is in great need by saving more than he otherwise would have done

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

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

ex ante efficient ex post individually rational trade abstract consider a bilateral trade model with two sided incomplete information for a general set of independent beliefs an ex post individually rational mechanism generating the same level of ex ante expected gains from trade as an ex ante efficient interim individually rational mechanism is constructed thus imposing the stronger notion of ex post individual rationality on this mechanism design problem generates no loss of efficiency

foreign capital and protectionism in terms of a simple model it is shown that the growth in the export processing zone through an influx of foreign owned capital reduces welfare for an economy importing capital intensive goods and following a protectionary policy similarly it follows that growth in the export processing zone should benefit economies importing labor intensive goods

assessing global resource use and greenhouse emissions to 2050 with ambitious resource efficiency and climate mitigation policies achieving sustainable development requires the decoupling of natural resource use and environmental pressures from economic growth and improvements in living standards g7 leaders and others have called for improved resource efficiency along with inclusive economic growth and deep cuts in global greenhouse emissions however the outlooks for and interactions between global natural resource use resource efficiency economic growth and greenhouse emissions are not well understood we use a novel multi regional modeling framework to develop projections to 2050 under existing trends and three policy scenarios we find that resource efficiency could provide pro growth pro environment policies with global benefits of usd 2 4 trillion in 2050 and ease the politics of shifting towards sustainability under existing trends resource extraction is projected to increase 119 from 2015 to 2050 from 84 to 184 billion tonnes per annum while greenhouse gas emissions increase 41 both driven by the value of global economic activity more than doubling resource efficiency and greenhouse abatement slow the growth of global resource extraction so that in 2050 it is up to 28 lower than in existing trends resource efficiency reduces greenhouse gas emissions by 15 20 in 2050 with global emissions falling to 63 below 2015 levels when combined with a 2 c emissions pathway in contrast to greenhouse abatement resource efficiency boosts near term economic growth these economic gains more than offset the near term costs of shifting to a 2 c emissions pathway resulting in emissions in 2050 well below current levels slower growth in resource extractions and faster economic growth

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

the welfare effects of bundling in multichannel television markets we measure how the bundling of television channels affects short run welfare we estimate an industry model of viewership demand pricing bundling and input market bargaining using data on ratings purchases prices bundles and input costs we conduct simulations of a la carte policies that require distributors to offer individual channels for sale to consumers we estimate that negotiated input costs rise by 103 0 percent under a la carte these higher input costs offset consumer benefits from purchasing individual channels mean consumer and total surplus change by an estimated 5 4 to 0 2 percent and 1 7 to 6 0 percent respectively jel d12 l11 l51 l82 m31

a simple production model in trade and its applications abstract in a simple production model some counter intuitive results are derived a increase in the relative price of good might reduce its production and reduce the absolute return to the specific factor exclusively used in this sector b uniform technical progress in two sectors might lead to a contraction in one of those sectors later other applications of such a structure are discussed

should export share requirements be implemented under quota protection in this paper the authors develop a model to analyze the effects of export share requirements when a quota is in place they show that when foreign capital is located in specific economic activity zones identified with the importable sector an increase in export share requirements reduces welfare owing to the price induced higher payments to foreign capital

export performance requirements foreign investment quotas and welfare in a small dynamic economy abstract this paper examines the welfare effects of trade related investment measures trims in an intertemporal model with accumulations of domestic capital and foreign bonds the trims considered are foreign investment quotas and export share requirements given a pre existing tariff the second best policy to the host economy is a foreign investment quota together with an export share requirement hence completely eliminating the use of trims in the presence of tariffs as agreed upon in the uruguay round of gatt in 1994 may be sub optimal from the viewpoint of the host country

the equivalence of lending equilibria and signalling based insurance under asymmetric information i present a model in which a continuum of individuals have stochastic idiosyncratic income shocks complete insurance is physically feasible but unattainable due to an information asymmetry income shocks are observable only by the individuals receiving them any insurance institution must therefore rely on self reporting of income innovations two ways of achieving incentive compatible self reporting are presented the first is a debt market with an explicit lending restriction the second is an insurance contract that linearly filters a signal transmitted by individuals the two are then demonstrated to be identical equilibrium consumption fluctuates in a random walk which is inefficient given the physical potential for complete insurance but is efficient given the information constraints the results are complementary to those of green 1987 but permit more general stochastic processes of income to be analyzed serial correlation of income reduces the efficiency of the insurance

heterogeneous preferences and equilibrium trading volume abstract the representative agent lucas model stresses aggregate risk and hence does not allow us to study the impact of agents heterogeneity on the dynamics of equilibrium trading volume in this paper we investigate under what conditions non informational heterogeneity i e differences in preferences and endowments leads to nontrivial trading volume in equilibrium we present a non informational no trade theorem that provides necessary and sufficient conditions for zero equilibrium trading volume in a continuous time lucas market model with heterogeneous agents multiple goods and multiple securities we explain in detail how no trade equilibria are related to autarky equilibria portfolio autarky equilibria and peculiar financial market equilibria which play an important role in the literature on international risk sharing

bargaining with optimism identification and estimation of a model of medical malpractice litigation we study a model of bargaining with optimism where players have heterogeneous beliefs about the final resolution beliefs and bargaining surplus are identified from the settlement probability and the distribution of accepted transfers using data from medical malpractice lawsuits in florida we estimate doctor and patient beliefs and the distribution of potential compensation we find that patients are more optimistic and doctors more pessimistic when the severity of injury is higher and the joint optimism diminishes as severity increases we quantify the increase in settlement probability and the reduction in accepted settlement offers under counterfactual caps on the total compensation

efficient contracting with reliance and a damage measure this article reexamines the problem of breach of contract studied by shavell 1980 1984 and rogerson 1984 by considering explicitly the incentive problems that arise from asymmetric information and transaction specific investment we derive the optimal contract which consists of variable price and damage payment schedules each of which is set before any private information is observed we show that the optimal contract attains full classical efficiency

identification and estimation of stochastic bargaining models stochastic sequential bargaining models merlo and wilson 1995 1998 have found wide applications in different fields including political economy and macroeconomics due to their flexibility in explaining delays in reaching an agreement this paper presents new results in nonparametric identification and estimation of such models under different data scenarios

auctioning and bargaining an econometric study of timber auctions with secret reservation prices this article considers a first price sealed bid auction at which the seller s reservation price is not announced in advance we allow for a second round of bargaining and consider the nash bargaining outcome when the object is unsold after the auctioning round we characterize the bidders and seller s bayesian nash equilibrium strategies the distributions of the buyers and seller s private values are estimated by nonlinear least squares from auction data on standing timber while solving numerically the differential equations characterizing the seller s and buyers equilibrium strategies the performance of the estimated model is then compared to a model in which the players behave myopically

identification and estimation of auction models with unobserved heterogeneity in many procurement auctions the bidders unobserved costs depend both on a common shock and on idiosyncratic private information assuming a multiplicative structure i derive sufficient conditions under which the model is identified and propose a non parametric estimation procedure that results in uniformly consistent estimators of the cost components distributions the estimation procedure is applied to data from michigan highway procurement auctions private information is estimated to account for 34 of the variation in bidders costs it is shown that accounting for unobserved auction heterogeneity has important implications for the evaluation of the distribution of rents efficiency and optimal auction design

reputational comparative advantage and multinational enterprise 1 introduction when cultivating a new export market or attempting to expand its share of an existing market an exporter is likely to find that it has been preceded by its reputation minus a readily identifiable brand name quality reputation may solely reflect the country of origin for example when consumers are presented with a large amount of complex product information they may use the country of origin as a heuristic in forming product impressions without considering other product attributes 1 in this article i show that this heuristic decision making process can affect a firm s quality decision and can therefore become self fulfilling hence any bias that consumers have may be well founded however it is only correct because firms respond rationally to it colombia s garment industry provides an interesting example of a self fulfilling unfavorable quality reputation in international trade as described by morawetz 1981 a single colombian garment firm took a contract for 50 000 men s suits that was beyond its capability the poor quality result so tarnished the american importer s name that other high quality importers become wary of colombian sewn garments with the payoff to high quality production reduced colombian garment firms then concentrated on low quality markets and the newly found unfavorable reputation was justified in the model constructed here consumers see only a noisy signal of the product s quality at the time of purchase therefore their posterior beliefs are based on this noisy signal and the country of origin reputations as will be made clear higher quality firms benefit more from an increase in their country s reputation so that a better reputation generates an increase in the percentage of high quality firms in this way the reputation becomes self fulfilling and ex ante identical countries can be correctly perceived as differing in their percentage of high quality producers i next introduce an economy with two sectors one sector produces more complex goods where high quality is not easily verified and is more essential to the product s performance these may be technology intensive products or they may consist of the design and marketing of the goods produced in the other sector in particular high quality production costs and the consumer s value for high quality goods is greater in this sector i show that this sector becomes more profitable as the country of origin reputation increases hence if one country s equilibrium reputation is low and the other country s equilibrium reputation is high then the pattern of specialization and international trade can be determined solely by reputational comparative advantage 2 finally i show that reputational comparative advantage can overshadow a small technological comparative disadvantage in determining the pattern of international trade given this pattern of trade and specialization based on reputational comparative advantage a high reputation firm may expend resources to establish a multinational enterprise mne in the low reputation country for example many mne products require the differing specializations of both the high and low reputation countries although differing in motivation this result accords well with more traditional models of vertical mne 3 however this impetus for mne as well as its more traditional counterparts does not explain why the mne would choose foreign direct investment fdi over a less costly licensing arrangement 4 the quality uncertainty in this model along with the difference in equilibrium reputations allows us to address this question in particular appropriable reputational rents are generated by fdi when the high reputation parent firm procures and internalizes production with a low reputation host firm this fdi breaks the low reputation equilibrium of the host firm and generates reputational rents

multi round procurement auctions with secret reserve prices theory and evidence when a secret reserve price is used in an auction the auctioneer cannot guarantee that the good can be sold out at the auction and can reauction the unsold objects in the next round motivated by this interesting feature observed in the procurement auctions organized by the indiana department of transportation we construct a dynamic bidding model in multi round procurement auctions with secret reserve prices and evaluate how the release of the auctioneer s reserve price affects bidders bidding behavior and the auctioneer s expected payment our theoretical model predicts that the equilibrium bids uniformly decline over stages and the numerical analysis of our model indicates that hiding the reserve price may be better than announcing it for the auctioneer under some specifications of underlying distributions we develop an empirical model with bidders discount factor equal to zero to recover the unknown structural parameters and to conduct counterfactual analyses copyright 2008 john wiley sons ltd

protection and the gainful effects of foreign capital abstract an increased foreign capital inflow into a protected sector is generally immiserizing we show that if the protected sector produces an intermediate input positive welfare effects may emerge a striking result is that it might lead to an increased import demand for the intermediate input which is a substitute for the product of the import competing sector

strategy proof stochastic assignment abstract i study strategy proof assignment mechanisms where the agents reveal their preference rankings over the available objects a stochastic mechanism returns lotteries over deterministic assignments and mechanisms are compared according to first order stochastic dominance i show that non wasteful strategy proof mechanisms are not dominated by strategy proof mechanisms however non wastefulness is highly restrictive when the mechanism involves randomization in fact the random priority mechanism i e the random serial dictatorship and a recently adopted school choice mechanism deferred acceptance with random tie breaking are wasteful i find that both these mechanisms are dominated by strategy proof mechanisms in general strategy proof improvement cannot be due to merely reshuffling objects and therefore must involve assigning more objects

coalition proof equilibrium we characterize the agreements that the players of a noncooperative game may reach when they can communicate prior to play but they cannot reach binding agreements a coalition proof equilibrium is a correlated strategy from which no coalition has an improving and self enforcing deviation we show that any correlated strategy whose support is contained in the set of actions that survive the iterated elimination of strictly dominated strategies and weakly pareto dominates every other correlated strategy whose support is contained in that set is a coalition proof equilibrium consequently the unique equilibrium of a dominance solvable game is coalition proof journal of economic literature classification

bidding and renegotiation in procurement auctions abstract in this paper we study renegotiation in procurement auctions a procurer with private valuation announces a project which can be completed by many firms these firms submit bids which may be renegotiated upon later in the equilibrium we characterize the probability of renegotiation is decreasing in both the cost of renegotiation and the number of firms we conclude that the initial bids are more than cheap talk these prices serve simultaneously as bids to win the contract and signals of the firms costs finally we compare our model to other renegotiation models in the literature

material flow accounts balances and derived indicators for the czech republic during the 1990s results and recommendations for methodological improvements abstract the economy and the environment are connected through material and energy flows these flows are the key cause of environmental problems together with land use and other biological and social factors and can serve as an indirect indicator of pressure on the environment the leading method for assessing material flows and dematerialisation at a macroeconomic level was developed during the 1990s by a number of research institutes and organisations the result of this effort was the guide eurostat 2001 92 this is a guide for the analysis of the total mass of annual material inputs and outputs for the whole economic system using accounts balances and derived indicators of material flows the manual touches only briefly on the flows between various sectors of the economy this article describes the application of material flow analysis mfa to the economy of the czech republic relevant indicators were derived on the basis of accounts and balances of material flows compiled for the czech republic for 1990 2000 the indicators and analysis of material flows presented here are the first results covering a long time period and a comprehensive set of material flow accounts in a transition economy the results show that indicators of material flows decreased during the 10 year period analysed by approximately 30 40 material intensity also dropped by 30 i e material efficiency increased by 30 while the material intensity of other countries such as germany dropped by 30 in the 15 year period finally it has been possible to demonstrate that economic growth as expressed by gdp has been decoupled from environmental pressure as expressed by material flow indicators the article proposes further work that should be undertaken in mfa at macroeconomic level in the czech republic in conclusion recommendations are made on how to improve the methodology used

the impact of reserve prices on the perceived bias of expert appraisals of fine art we examine whether the expert appraisals provided to bidders before major art auctions are unbiased indicators of market value despite a strong grounding in theory this aspect of optimal auction design has been frequently challenged in previous empirical research particularly in the market for fine art we adopt a valuation benchmark that incorporates sellers reservation prices as well as high bids and recognize latent censoring due to works that fail to make reserve although the auction houses never divulge sellers reserve prices which are therefore unobservable we exploit the fact that they can be observed indirectly via their impact on buy in rates using the set of french impressionist paintings brought to auction from 1985 to 2001 we estimate the distribution of seller reserve prices establish their link to a proper valuation benchmark and isolate the selection bias due to bought in works on the perceived market value of fine art works brought to auction after controlling for the impact of reservation prices and considering all works brought to auction and therefore all works appraised we find no evidence of bias in the experts pre sale estimates

asymmetric information information externalities and efficiency the case of oil exploration in this article we examine the efect of private information and information externalities on the ex post eficiency of investment in oil exploration we show that too much drilling tends to occur ifjirms believe that the area is likely to contain a sizeable pool of oil and too little drilling occurs if the opposite is true bargaining with well defined property rights to the information externality can eliminate underinvestment but overinvestment remains a problem because firms have an incentive not to disclose their private information

stability with one sided incomplete information two notions of stability ex ante stability and bayesian stability are investigated in a matching model with non transferrable utility interdependent preferences and one sided incomplete information ex ante stable matching outcomes are unblocked for every belief on the blocking partner s type while bayesian stable matching outcomes are unblocked with respect to prior beliefs ex ante stability is a minimal requirement bayesian stability is a more selective desideratum with sound efficiency properties

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

estimating a bargaining model with asymmetric information evidence from medical malpractice disputes this article uses a unique data set on medical malpractice disputes in florida to estimate the parameters of a bargaining game with asymmetric information the main findings of the article suggest that the bargaining game can replicate most of the qualitative and quantitative features of the data the article also simulates alternative policy regimes to quantify the effects of possible tort reforms such as imposing limits on contingency fees and caps on jury awards

auction design and favoritism abstract the theory of auctions has ignored the fact that often auction designers not the principal design auctions in a multi attribute auction the auction designer may bias his subjective evaluation of quality or distort the relative weights of the various attributes to favor a specific bidder an ancient concern in the procurement of weapons in the auctioning of government contracts and in the purchase of electricity by regulated power companies the paper analyzes the steps to be taken to reduce the possibility of favoritism it is first shown that in the absence of favoritism quality differentials among firms are more likely to be ignored if the auction designer has imperfect information about the firm s costs second if the auction designer may collude with only one bidder the other bidders should be chosen if they are at least as efficient as the former bidder and no hard information about quality differentials is released by the auction designer that would justify fair discrimination in favor of the former bidder last if the auction designer can collude with any bidder the optimal auction tends to a symmetric auction in which quality differentials are ignored the possibility of favoritism reduces the auction designer s discretion and makes the selection process focus on non manipulable monetary dimensions of bids

decentralized trading with private information the paper studies how asset prices are determined in a decentralized market with asymmetric information about asset values we consider an economy in which a large number of agents trade two assets in bilateral meetings a fraction of the agents has private information about the asset values we show that over time uninformed agents can elicit information from their trading partners by making small offers this form of experimentation allows the uninformed agents to acquire information as long as there are potential gains from trade in the economy as a consequence the economy converges to a pareto efficient allocation

to bargain or not to bargain the role of fixed costs in price negotiations abstract retailers routinely allow consumers to negotiate a discount off the posted price especially for big ticket items such as home appliances furniture automobiles and real estate as well as on online platforms such as amazon ebay and alibaba the profitability of such a strategy relative to selling only at posted prices depends on consumers willingness to initiate a negotiation and ability to negotiate a discount in this paper we incorporate a consumers decision of whether or not to negotiate into a demand model the decision to negotiate hinges on how the expected discount from negotiation compares to the magnitude of a non pecuniary cost that the consumer incurs by initiating the negotiation this cost has implications for consumer demand and firm profitability the current study shows how this cost can be non parametrically identified separately from consumers ability to get a discount and marginal utility of income the application of this model to individual level data on refrigera

sealed bid versus open auctions the evidence data from u s forest service timber auctions are used to test vickrey s original proposition that sealed bid and open auctions yield equal revenue models for the high bid in an auction are specified and estimated using three different procedures ordinary least squares two stage least squares and maximum likelihood the second two procedures include a second equation which accounts for the forest service s auction choice and therefore control for selection bias these two procedures which unlike ordinary least squares yield consistent estimators imply a statistically and economically insignificant difference in high bids between sealed bid and open auctions

virtual utility and the core for games with incomplete information abstract the core is extended to games with incomplete information the feasible set is characterized by incentive compatible mechanisms blocking is organized at the interim stage by an incentive compatible mediation plan membership of the blocking coalition itself may be determined randomly by the blocking mediator nonemptiness of an interim fine core is proven for games with a balanced structure independent types and sidepayments an offer of severance payments may be needed to inhibit blocking core allocations are characterized in terms of virtual utility scales that generalize the weighted utility scales of the inner core mechanisms that achieve core allocations are coalitionally durable

on delay in bargaining with one sided uncertainty recently attention has been given to a model of two person bargaining in which the parties alternate making offers and there is uncertainty about the valuation of one party the purpose of the analysis has been to identify delay to agreement with a screening process where agents with relatively lower valuations distinguish themselves by waiting longer to settle we point out a fundamental difficulty with this program by demonstrating that the assumptions used in the literature allow for delay only in so far as the time between offers is significant

bilateral trade with the sealed bid k double auction existence and efficiency for k in the unit interval the k double auction determines the terms of trade when a buyer and a seller negotiate transfer of an item the buyer submits a bid b and the seller submits an offer s trade occurs if b exceeds s at price kb 1 k s we model trade as a bayesian game in which each trader privately knows his reservation value but only has beliefs about the other trader s value existence of a multiplicity of equilibria is proven for a class of trader s beliefs for generic beliefs however these equilibria are shown to be ex ante inefficient

the home selling problem theory and evidence this paper formulates and solves the problem of a homeowner who wants to sell their house for the maximum possible price net of transactions costs including real estate commissions the optimal selling strategy consists of an initial list price with subs equent weekly decisions on how much to adjust the list price until the home is sold or withdrawn from the market the solution also yields a sequence of reservation prices that determine whether the homeowner should accept bids from potential buyers who arrive stochastically over time with an expected arrival rate that is a decreasing function of the list price this model was developed to provide a theoretical explanation for list price dynamics and bargaining behavior observed for a sample of homeowners in england in a new data set introduced by

on the importance of linking inputs and outputs in material flow accounts the weight of nations report revisited abstract the influential word resources institute report the weight of nations of 2000 called for additional research effort to understand linkages between primary material inputs and output of waste and emissions in material flow accounts the report proved highly influential in driving efforts toward methodological harmonization of national material flow accounts but had little impact in triggering additional study into comprehensive material flow accounts and material balances for national economies in this research we test the feasibility of linking inputs to outputs by establishing material flow balances for five countries including germany japan the united states china and australia using available statistical data and agreed calculation methods while statistics for emissions to air are well documented statistics for solid waste are usually incomplete and for many countries are of poor quality we employ stock and flow modeling to determine the waste potential of a national economy which can be used to validate statistically reported waste flows we ask whether the accounts could be up scaled to a global dataset and discuss challenges and limitations of such an approach we also revisit the findings of the wri report and find that methodological improvements to material flow accounting yield more reliable results than could be achieved two decades ago unifying input and output accounts in one coherent framework i e a material balance allows alignment of the policy domains of resource efficiency greenhouse gas and pollution abatement and waste minimization