evaluating leases with complex operating options abstract the paper deals with the numerical valuation of leasing contracts with a variety of embedded operating options unlike earlier work which either ignores such options or focuses on only one type of operating option in isolation this paper recognizes that leasing is a context in which complex options typically occur as well as the importance of using computational methods to quantify the interactions among several options present in combination it describes a contingent claims analysis cca of operating lease options and suggests a cca based numerical analysis method for valuing leasing contracts with multiple such options a numerical leasing example with the options to cancel the lease early extend its life and purchase the leased asset is presented for illustration

effect of information feedback on bidder behavior in continuous combinatorial auctions combinatorial auctions in which bidders can bid on combinations of goods can increase the economic efficiency of a trade when goods have complementarities recent theoretical developments have lessened the computational complexity of these auctions but the issue of cognitive complexity remains an unexplored barrier for the online marketplace this study uses a data driven approach to explore how bidders react to the complexity in such auctions using three experimental feedback treatments using cluster analyses of the bids and the clicks generated by bidders we find three stable bidder strategies across the three treatments further these strategies are robust for separate experiments using a different setup we also benchmark the continuous auctions against an iterative form of combinatorial auction the combinatorial clock auction the enumeration of the bidding strategies across different types of feedback along with the analysis of their economic implications is offered to help practitioners design better combinatorial auction environments this paper was accepted by lorin hitt information systems

a parametrization of the auction design space abstract we present an extensive breakdown of the auction design space that captures the essential similarities and differences of many auction mechanisms in a format more descriptive and useful than simple taxonomies this parametrization serves as an organizational framework in which to classify work within the field and uncovers parameter combinations corresponding to novel mechanisms the structured characterization of auction rules can be exploited for the modular design of configurable auction servers it also facilitates the communication of auction rules to software agents enabling the automation of flexible market based negotiation journal of economic literature classification numbers c70 d44

a multi unit tender award process the case of transantiago the transantiago public transit services were grouped into five trunk service units and 10 feeder units and were awarded to private operators through a simultaneous tender to avoid problems of ownership concentration limits were placed on the maximum number of units per operator this paper describes the issues involved in such simultaneous multi unit tenders where various actors bid for different business units to be awarded in a single tender process the general problem is formulated as a minimum cost network flow problem mcnfp tie breaking criteria are discussed and modeled the problem is then solved for the transantiago case there follows a discussion of the utility of handling this tender using the tool developed here

mergers and acquisitions between risk averse parties abstract this paper evaluates mergers and acquisitions ma however it may yield a higher price for the consumer moreover we show that a decentralized supply chain can be more beneficial for the parties than a centralized supply chain formed by acquisition

venture capital staged financing and optimal funding policies under uncertainty abstract our paper presents a dynamic model of entrepreneurial venture financing under uncertainty based on option exercise games between an entrepreneur and a venture capitalist vc in particular we analyze the impact of multi staged financing and both economic and technological uncertainty on optimal contracting in the context of vc financing our novel approach combines compound option pricing with sequential non cooperative contracting allowing us to determine whether renegotiation will improve the probability of coming to an agreement and proceed with the venture it is shown that both sources of uncertainty positively impact the vc investor s optimal equity share specifically higher uncertainty leads to a larger stake in the venture and renegotiation may result in a dramatic shift of control rights in the venture preventing the venture from failure moreover given ventures with low volatility situations might occur where the vc investor loses his first mover advantage based on a comparative static analysis new testable hypotheses for further empirical studies are derived from the model

optimal access pricing for natural monopoly networks when costs are sunk and revenues are uncertain this paper studies optimal access pricing for natural monopoly networks with large sunk costs and uncertain revenues using techniques from the option pricing literature we show that the optimal access price corresponds to a risk free form of the efficiency component pricing rule ecpr that is where the opportunity cost is based on the risk free rate of return we also show that at levels of revenue above the optimal level that triggers entry the entrant should pay a premium above risk free ecpr that rewards the incumbent for relinquishing his rights to the risky cash flows at the higher revenue level

elicitation of honest preferences for the assignment of individuals to positions the problem of eliciting honest preferences from individuals who must be assigned to a set of positions is considered individuals know that they will be charged for the positions to which they are assigned a set of prices that provide no incentive for the individual to misrepresent his preferences is suggested it is shown that these prices constitute an element of the optimal solution to the dual of a linear programming assignment problem both the optimal allocation and the prices to be charged can be derived by solving two linear programming problems once preferences have been elicited the procedure can usefully be viewed as a simulation of a competitive market under conditions where such a market cannot be expected to function well it results in an efficient allocation where all resources are valued at their opportunity costs and consumer surplus is maximized its outcome thus has the desirable properties of competitive market equilibria

real investment options with multiple sources of rare events abstract we value real investment options when the underlying asset follows a mixed jump diffusion process involving various types sources of rare events jumps these jumps are assumed independent of each other with each type having a log normally distributed jump size and a random poisson distributed arrival time they may represent uncertainties about the arrival and impact on the underlying investment of new information concerning technological innovation competition political risk regulatory effects and other sources an analytic solution is presented for european claims call or put options with multiple sources of jumps a discrete time markov chain methodology implemented within a finite difference scheme is proposed for the valuation of american as well as european options the approach is also applicable to financial options with multiple types of rare events the approach is illustrated through valuing complex real options with compound features involving interactions between optimal investment and subsequent operating decisions specifically we value a growth option and an extension option

competition for versus on the rails a laboratory experiment european countries and japan are contemplating more competition in passenger rail service in the netherlands the ministry of transport was assigned responsibility for making a recommendation to parliament for choosing between competition for the rails and competition on the rails the ministry commissioned the experiments reported here to acquire better understanding of the properties of the alternative policies competition on the rails involves allocation of rights to use station and time slot routes by price bids in a combinatorial auction competition for the rails involves allocation of rights to regional monopolies by fare structure bids for supplying a prespecified minimum schedule

theory experiment and the federal communications commission spectrum auctions abstract the fcc uses the simultaneous multi round auction sma to assign spectrum licenses congress mandated that the sma be compared to an auction that allows combinatorial bids we review the theoretical and experimental evidence relevant to the sma procedures and their inherent defects results from experiments evaluating the sma in comparison to a combinatorial auction designed by charles river and associates show that several of the sma rules hinder efficiency and create a trade off between efficiency and auction length the combinatorial auction outperforms the sma when license values are superadditive but requires more time to complete and is not robust

strategic information manipulation in duopolies abstract this paper studies a duopoly market in which firms can draw inferences concerning uncertain market demand from observations of their outputs and market price firms may adjust their outputs away from myopically optimal levels to affect the informativeness of the market price because firms quantities are observed firms can manipulate the extent to which belief revision occurs rather than the direction in which beliefs are revised as in signal jamming models we develop conditions and present examples under which the value of information is positive and negative and under which firms will increase or decrease quantity to manipulate information journal of economic literature classification numbers d80 l13

a binary conflict ascending price bicap mechanism for the decentralized allocation of the right to use railroad tracks the questions posed for study are motivated by controversies over how sweden might change from a centralized system of railroad management to a decentralized system the central rail administration banverket will retain ownership and maintenance responsibility of the tracks but will sell access to the tracks to private firms the questions are about the mechanism that might accomplish this task parties to the controversy have claimed that the technical aspects of networks will as a matter of principle preclude the operation of any decentralized method this paper explores the properties of a mechanism developed as a challenge to that claim the mechanism is examined in the context of a testbed experimental environment that contains many potential problem causing elements in the tests performed the mechanism operated to efficiently allocate access to the network and it did so for behavioral reasons that are understandable in terms of theory the paper closes with suggestions for further study of environments that might present additional challenges to a mechanism

design for optimized multi lateral multi commodity markets abstract in this paper we propose a design for an economically efficient optimized centralized multi lateral periodic commodity market that addresses explicitly three issues i substantial transportation costs between sellers and buyers ii non homogeneous in quality and nature commodities iii complementary commodities that have to be traded simultaneously the model allows sellers to offer their commodities in lots and buyers to explicitly quantify the differences in quality of the goods produced by each individual seller the model does not presume that products must be shipped through a market hub we also propose a multi round auction that enables the implementation of the direct optimized market and approximates the behaviour of the ideal direct optimized mechanism the process allows buyers and sellers to modify their initial bids including the technological constraints the proposed market designs are particularly relevant for industries related to natural resources we present the models and algorithms required to implement the optimized market mechanisms describe the operations of the multi round auction and discuss applications and perspectives

the impact of investment lags on investment decision abstract this paper suggests a valuation framework for an investment project through the concept of real options generally in real asset world decision time and its payment time are not identical this so called investment lag problem should be considered when valuing real assets when investment lags exist firms accommodation capacities play important roles in this paper the real effect of investment lag on investment value is tested upon various conditions we show the valuation process of real assets under the risk neutral world the closed form formula is also provided for valuing real assets including r d project

market architectures and institutional testbedding an experiment with space station pricing policies by the year 2000 the national aeronautics and space administration nasa plans to launch and operate an earth orbiting space station for decades into the future the station is expected to play a dominant role in u s space research and in the commercialization of space if the expectations are correct then the station will be a complex of potentially valuable resources and services much sentiment exists within the government that the allocation of those resources should be based on some sort of market oriented policy a more business like approach this paper is part of a larger project that is intended to ascertain what that policy might be

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

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 real options game of alliance timing decisions in biopharmaceutical research and development abstract in this article we examine the alliance timing trade off facing both pharmaceutical and biotech firms in a stochastic and competitive environment specifically we introduce a real options game rog where a pharmaceutical company can choose between two competing biotech firms by sequentially offering a licensing deal early or late in the new drug development process we find that when the alliance raises the drug market value significantly the agreement is signed late in the drug development process this suggests that the postponement effect implied by the use of real options prevails over the biotech firms competition effect which would instead play in favor of an early agreement for pre emption reasons when the alliance does not raise the drug market value significantly the optimal timing depends on the level of royalties retained by the pharmaceutical company in particular an early agreement is signed in the presence of a low level of royalties in this case indeed the competition effect becomes predominant because the pharmaceutical company can substantially reduce the upfront payment and thus the potential loss incurred if the biotech partner does not exercise her option to continue the new drug development process we also show that the alliance timing outcomes of our real options game considerably differ from those obtained when both parties use the net present value npv to assess their payoffs

learning experimentation and monetary policy abstract we present a model of monetary policy where the policymaker faces uncertainty about which he is learning in a bayesian fashion a fixed money supply rule is not optimal since the learning leads to adjustments in the monetary action we present cases in which it is optimal to bear some cost in terms of current output performance in order to gain information that can be used in the formulation of future monetary policy experimentation therefore pays we also show that even passive learning without experimentation still leads to an activist monetary policy i e one that is responsive to new information

structural uncertainty and subsidy removal for economies in transition abstract economies in transition are faced with a high degree of structural uncertainty i e uncertainty about which it is possible to learn through experience we study structural uncertainty s effects on a subsidy removal program subsidy removal causes unemployment but yields fiscal benefits and facilitates private sector growth when the policymaker does not know the speed with which the private sector absorbs the unemployed he will be driven toward a more decisive and therefore more informative policy the model also rationalizes policy reversals and implies that irreversibility constraints and political instability dampen the learning effect making policy more gradualist

smart market mechanisms from practice to theory abstract for the past decade experimental economists have been developing smart markets that allow for the processing and balancing of complex contingencies automatically by the market mechanism we develop a theoretical framework for representing smart markets and demonstrate a smart market mechanism that enforces all or none contingencies for a single good and satisfies four basic properties of fairness and efficiency it is then shown that such a market violates a fundamental invariant of traditional auction markets and so the law of a single price does not appear to apply to such a market we conclude by discussing the implications of this result to the general design of smart market mechanisms

a theory of public debt management with unobservable demand the literature on debt management has devoted little attention to the practice of floating debt using subscription issues i e at a fixed price and quantity even if this practice is rather common in many countries as an alternative to placement techniques that involve competitive bidding the focus of this paper is on this marketing strategy for a public debt manager facing uncertain market conditions in particular we consider a framework where government bonds are the only investment opportunity the debt manager therefore holds monopoly power over the market for financial assets and solves his profitmaximisation problem by setting the price of the bonds in the face of an unobservable demand function intertemporal economic decisions under uncertainty can be modelled as multiperiod control problems when the parameters of the true model are unknown as in our case a tradeoff typically arises between current profits and the value of information which can be extracted through price experimentation in an active learning framework in particular agents are assumed to use such information in order to update their stock of knowledge according to bayes rule 2 several applications of the modelling strategy discussed above have been explored for example an active learning setting can fit the description of the problem of a consumer facing the decision to buy a good with uncertain quality alternatively the same setting can be employed in order to investigate the behaviour of a monopolistic firm facing an unknown demand for its product in this paper we model the macroeconomic policy oriented issue previously illustrated as a stochastic multiperiod control problem with learning we therefore assume that debt policy and in particular the debt manager s pricing strategy is the result of the intertemporal maximisation of the government s objective function subject to a budget constraint in a context where information is optimally employed in the decision process in addition the

voting on the budget deficit comment textabstractin this comment it is argued that a balanced budget rule may cause underinvestment as a consequence such a rule is not ex ante efficient in order to achieve the ex ante optimal outcome it would be necessary to add an extra rule for the level of public investment unfortunately however such an investment rule is likely to be very difficult to implement in practice when there are no rules to prevent underinvestment it is no longer clear whether a balanced budget rule is beneficial or not in some cases the cost of low levels of investment outweigh the benefits of a balanced budget

auction protocols for decentralized scheduling decentralized scheduling is the problem of allocating resources to alternative possible uses over time where competing uses are represented by autonomous agents market mechanisms use prices derived through distributing bidding protocols to determine schedules we investigate the existence of equilibrium prices for some general classes of scheduling problems the quality of equilibrium solutions and the behavior of an ascending auction mechanism and bidding protocol to remedy the potential nonexistence of price equilibria due to complementarities in preference we introduce additional markets in combinations of basic goods finally we consider direct revelation mechanisms and compare to the market based approach journal of economic literature classification numbers c62 c70 d44

allocating uncertain and unresponsive resources an experimental approach we identify an important class of economic problems that arise naturally in several applications the allocation of multiple resources when there are uncertainties in demand or supply unresponsive supplies no inventories and fixed capacities and significant demand indivisibilities rigidities examples of such problems include scheduling job shops airports or supercomputers zero inventory planning and the allocation and pricing of nasa s planned space station using experimental methods we show that the two most common organizations used to deal with this problem markets and administrative procedures can perform at very low efficiencies 60 65 efficiency in a seemingly robust example thus there is a need to design new mechanisms that more efficiently allocate resources in these environments we develop and analyze two mechanisms that arise naturally from auctions used to allocate single dimensional goods these new mechanisms involve computer assisted coordination made possible by the existence of networked computers both mechanisms significantly improve on the performance of administrative and market procedures

models for bundle trading in financial markets abstract bundle trading is a new trend in financial markets that allows traders to submit consolidated orders to sell and buy packages of assets we propose a new bundle based market clearing formulation for portfolio balancing that extends the previous models in the literature through a more detailed representation of portfolios and the formulation of new bidding requirements we also present post optimality tie breaking procedures intended to discriminate between equivalent orders on the basis of submission times numerical results evaluate the bundle effect as well as the bidding flexibility and the computational complexity of the formulation

optimal exercise of jointly held real options a nash bargaining approach with value diversion this paper provides a two stage decision framework in which two or more parties exercise a jointly held real option we show that a single party s timing decision is always socially efficient if it precedes bargaining on the terms of sharing however if the sharing rule is agreed before the exercise timing decision is made then socially optimal timing is attained only if there is a cash payment element in the division of surplus if the party that chooses the exercise timing can divert value from the project then the first best outcome may not be possible at all and the second best outcome may be implemented using a contract that is generally not optimal in the former cases our framework contributes to the understanding of a range of empirical regularities in corporate and entrepreneurial finance

allocation of track capacity experimental evidence on the use of priority auctioning in the railway industry allocation of track capacity concerns multiple users facing demand indivisibilities running trains over an inelastic supply of railway tracks the paper suggests a vickrey type mechanism to handle incentive aspects of this technically complex optimisation task here the price for operating a train will correspond to the bids foregone by other operators who are pushed off their preferred routes the paper reports the results of 11 experimental markets using variations of this mechanism where each market includes up to 10 trading periods and subjects bid for routes over a highly stylised railway network the experiments generated solutions that capture 90 100 of potential benefits

earnouts in mergers and acquisitions a game theoretic option pricing approach abstract this paper presents a valuation approach for merger and acquisition m a deals employing contingent earnouts it is argued that these transactions have option like features and the paper uses a game theoretic option approach to model the value of such claims more specifically the paper examines the impact of uncertainty on the optimal timing of m a using earnouts and it also investigates the impact of uncertainty on the terms of the earnout optimal earnout and initial payment combinations are endogenously derived from the model and testable hypotheses are developed the theoretical contribution of this paper is a dynamic decision making model of the invest to learn option generated upon investment in an acquisition the paper also offers practical implications for the design of acquisitions employing earnouts

the continuous combinatorial auction architecture the paper reports the architecture of a continuous combinatorial auction preferences are based on sets of items and feasibility requires the nonintersection of sets countdown clocks replace eligibility and activity requirements typical of rounds based auctions bids remain in the system to be combined with new bids to form winning collections increment requirements dictate improvements over appropriate collections of existing bids the auction evolved from experimental methods and operates at high levels of efficiency field applications are reported and result in natural equilibration in a few hours as opposed to days or weeks required by round based architectures

the impacts of uncertainties in a real options model under incomplete information abstract this paper examines the impact with respect to the uncertainty of the underlying state variable profit uncertainty on the real options model in a situation of incomplete information profit uncertainty has not incorporated into the real options model under incomplete information in that the underlying state variable is not formulated as the stochastic process see e g bernardo a e chowdhry e b 2002 resources real options and corporate strategy journal of financial economics 63 211 234 we extend the model developed by bernardo and chowdhry to formulate the underlying state variable as the stochastic process we conclude that profit uncertainty has the same type of impact on the real options value and its triggers both under complete and incomplete information

matching with contracts we develop a model of matching with contracts which incorporates as special cases the college admissions problem the kelso crawford labor market matching model and ascending package auctions we introduce a new law of aggregate demand for the case of discrete heterogeneous workers and show that when workers are substitutes this law is satisfied by profit maximizing firms when workers are substitutes and the law is satisfied truthful reporting is a dominant strategy for workers in a worker offering auction matching algorithm we also parameterize a large class of preferences satisfying the two conditions

uncertainty and stepwise investment we analyze the optimal investment strategy of a firm that can complete a project either in one stage at a single freely chosen time point or in incremental steps at distinct time points the presence of economies of scale gives rise to the following trade off lumpy investment has a lower total cost but stepwise investment gives more flexibility by letting the firm choose the timing individually for each stage our main question is how uncertainty in market development affects this trade off the answer is unambiguous and in contrast with a conventional real options intuition higher uncertainty makes the single stage investment more attractive relative to the more flexible stepwise investment strategy

a new and improved design for multiobject iterative auctions in this paper we present a new improved design for multiobject auctions and report on the results of experimental tests of that design we merge the better features of two extant but very different auction processes the simultaneous multiple round smr design used by the fcc to auction the electromagnetic spectrum and the adaptive user selection mechanism ausm of banks et al 1989 allocating uncertain and unresponsive resources an experimental approach rand journal of economics vol 20 no 1 pp 1 25 then by adding one crucial new feature we are able to create a new design the resource allocation design rad auction process which performs better than both our experiments demonstrate that the rad auction achieves higher efficiencies lower bidder losses higher net revenues and faster times to completion without increasing the complexity of a bidder s problem

polarization and inefficient policies of the economy in this case the costs of producing a public good the parties each propose a policy an election is held and the policy of the winning party is implemented voters and parties care about the level of the public good and costs two kinds of sequential equilibria exist revealing where voters learn the true costs and the implemented policy adjusts to costs and non revealing if parties preferences are polarized only non revealing equilibria fulfill a refinement criterion like the intuitive criterion if they are alike only revealing equilibria fulfill this criterion thus less political polarization improves information revelation in electoral democracies policy motivated parties are likely to be better informed about the functioning of the economy than are voters this paper presents a model where two parties but not voters are informed about the cost of producing a public good we study whether an electoral democracy leads to efficient production of the public good given this asymmetry of information in particular under which circumstances will the implemented policy the level of the public good reflect actual costs the main result is that the policy will reflect costs if and only if at least one of the parties has preferences which are sufficiently similar to the median voter s in this sense polarization leads to inefficiency the public good can be for instance infrastructure medicare or military services both a continuum of voters and the parties have preferences over the amount of the good that is provided by the government the preferences of the two parties are situated on each side of those of the median voter the costs of providing the good are not precisely known to the voters who only know the distribution of costs and that they will pay for these costs as taxpayers on the other hand the parties know the costs

allocative efficiency of markets with zero intelligence traders market as a partial substitute for individual rationality we report market experiments in which human traders are replaced by zero intelligence programs that submit random bids and offers imposing a budget constraint i e not permitting traders to sell below their costs or buy above their values is sufficient to raise the allocative efficiency of these auctions close to 100 percent allocative efficiency of a double auction derives largely from its structure independent of traders motivation intelligence or learning adam smith s invisible hand may be more powerful than some may have thought it can generate aggregate rationality not only from individual rationality but also from individual irrationality

the option value of advanced r d existing tools for making r d investment decisions cannot properly capture the option value in r d since many new products are identified as failures during the r d stages the possibility of refraining from market introduction may add a significant value to the npv of the r d project this paper presents new theoretical insight by developing a stochastic jump amplitude model in a real setting the option value of the proposed model depends on the expected number of jumps and the expected size of the jumps in a particular business the model is verified with empirical knowledge of current research in the field of multimedia at philips corporate research this way the gap between real option theory and the practice of decision making with respect to investments in r d is diminished

polarization political instability and active learning in a multiperiod setting decision makers can learn about the consequences of their decisions through experimentation we examine how polarization and political instability affect learning through experimentation we distinguish two cases i the decision to be made is not salient and does not affect the outcome of subsequent elections exogenous elections and ii the decision is salient and the election outcome depends on it endogenous elections it is shown that while the possibility of learning increases activism the existence of political instability distorts learning furthermore we demonstrate that when elections are exogenous polarization between political parties does not always decrease active learning

voting on the budget deficit this paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending all voters agree that a balanced budget is ex ante optimal however if there is disagreement between current and future majorities a balanced budget is not a political equilibrium under majority rule under certain conditions a majority of the voters favors a budget deficit and the equilibrium deficit is larger the greater is the polarization among voters copyright 1990 by american economic association

package auctions and exchanges we report recent advances concerning the package allocation problem in which traders seek to buy or sell combinations of goods the problems are most difficult when some goods are not substitutes in that case competitive equilibrium typically fail to exist but the core is non empty and comprises the competitive solutions also in that case the vickrey auction fails to select core allocations and yield revenues that are less than competitive the ausubel milgrom auction generally selects core allocations and when goods are substitutes prescribes the vickrey allocation we also evaluate the problems and promise of mechanisms for the package exchange problem

combinatorial auction design combinatorial auctions have two features that greatly affect their design computational complexity of winner determination and opportunities for cooperation among competitors dealing with these forces trade offs between desirable auction properties such as allocative efficiency revenue maximization low transaction costs fairness failure freeness and scalability computational complexity can be dealt with algorithmically by relegating the computational burden to bidders by maintaining fairness in the face of computational limitations by limiting biddable combinations and by limiting the use of combinatorial bids combinatorial auction designs include single round first price sealed bidding vickrey clarke groves vcg mechanisms uniform and market clearing price auctions and iterative combinatorial auctions combinatorial auction designs must deal with exposure problems threshold problems ways to keep the bidding moving at a reasonable pace avoiding and resolving ties and controlling complexity

on auction protocols for decentralized scheduling abstract this note shows that for the combinatorial market goods defined by wellman et al 2001 there may not exist an optimal allocation that is in equilibrium moreover this result holds even if the value of each processed job is independent of its completion time the proposed algorithm for finding an equilibrium allocation using an assignment model fails due to complementarity even for instances that admit an optimal allocation which is in equilibrium

the simultaneous ascending auction dynamics of price adjustment in experiments and in the uk3g spectrum auction we develop a model of the behavior of bidders in simultaneous ascending auctions based on two principles principle of surplus maximization and principle of bid minimization these principles lead to models of both price dynamics and equilibration leading to disequlibrium structural equations that can be used for estimating bidder values the intention behind the development of this methodology is to provide an auctioneer a method of extracting information during an auction about possible closing prices we benchmark the performance of the model with data from experimental auctions and then apply it to the uk umts or third generation mobile auction

better faster cheaper an experimental analysis of a multiattribute reverse auction mechanism with restricted information feedback the majority of reverse auctions for procurement use a single attribute price format while providing constraints on nonprice attributes such as quality and lead time alternatively a buyer could choose to conduct a multiattribute auction where bidders can specify both a price and levels of nonprice attributes while such an auction may provide higher theoretical utility to the buyer it is not clear that this theoretical improvement will be realized given the increased complexity of the auction in this research we present an ascending auction mechanism for a buyer whose utility function is known and dependent on three attributes motivated by a supply chain procurement problem setting we consider quality and lead time for the two attributes in addition to price the auction mechanism provides the bidders with restricted feedback regarding the buyer s utility function we explore experimentally the performance of this multiattribute auction mechanism as compared to a price only auction mechanism compared with the price only auction we find that our mechanism design is effective in increasing both buyer utility and bidder supplier profits