spectrum auction designs and revenue variations this study examines a sample of 93 national 3g spectrum auctions for the period 2000 2011 to identify the sources of substantial revenue variations an implied reduced form econometric model that recognises the censored nature of the sample relates per capita winning bid per mhz per million populations values to regulator determined auction design characteristics auction competitiveness mobile wireless market conditions and spectrum package attributes identified from tender documents the analysis reveals that among other factors all auction design characteristics independently impact on realized 3g spectrum auction revenues

a non expected utility model and its application in practical auctions this article presents a non expected utility decision model which is nonlinear in the winning probabilities the model not only explicitly expresses bidders attitudes to risk but also addresses t

equilibrium valuation of natural resources the purpose of this paper is to provide a theoretical investigation of equilibrium spot and futures price behavior in a nonrenewable commodity market the underlying commodity is nonrenewable in the sense that the reserve level of the commodity is expected to decline over time in the absence of successful discoveries of additional reserves i wish to understand how the nonrenewable nature of the commodity influences the intertemporal extraction of the commodity equilibrium spot price behavior and the prices of derivative assets traded on the nonrenewable commodity there is considerable disagreement among economists whether resources are exhaustible in the sense of resource constraints becoming binding on our society in the foreseeable future some economists have argued that natural resources are being depleted at

open vs sealed bid auctions testing for revenue equivalence under singapore s vehicle quota system using data from the auction of vehicle quota licenses in singapore we study if revenue equivalence holds when the auction format was switched from a sealed bid format may 1990 to june 2001 to an open bidding format since july 2001 our econometric analysis indicates the change in auction format led to a change in bidding behavior on average the quota license premium under the open bidding format is about us 1000 about 7 5 of the category e license price in june 2001 lower compared to the forecast level that would have prevailed if there had been no change in the auction format

ranking auctions with risk averse bidders this paper ranks first and second price independent value auctions with risk averse bidders when entry is endogenous unless bidders exhibit decreasing absolute risk aversion dara the fixed n ranking of first price over second price is sustained however when bidders exhibit dara we show that the effect of entry sometimes reverses the ranking we discuss how elements of the auction environment such as the relative magnitude of entry costs the number of potential bidders and the degree of risk aversion affect the ranking journal of economic literatureclassification numbers d44 d82 c72

information aggregation failure in a model of social mobility abstract i study a model in which high and low income voters must decide between continuing with a status quo policy or switching to a different policy which is more redistributive under the status quo policy low income voters may get an opportunity to become high income earners such opportunities are expected to arise infrequently so in expectation these voters prefer the more redistributive policy nevertheless there is an equilibrium in which the vast majority of them cast their ballots in favor of re electing the less redistributive status quo although these voters are fully strategic and correctly assess their chances for upward mobility they vote exactly as if they are naive voters who over estimate their chances of becoming rich as the size of the electorate grows the status quo policy can be re elected with certainty and the election fails to fully aggregate information

sealed bid auctions based on cobb douglas utility function abstract this paper presents a more general independent private value model based on the assumption that cobb douglas utility function is used to make a tradeoff between the probability of winning the unit and the profit under the first price and second price sealed bid auctions the equilibrium bidding strategies are given and the seller s expected revenue comparisons are made

risk aversion and optimal reserve prices in first and second price auctions abstract we analyze the effects of buyer and seller risk aversion in first and second price auctions in the classic setting of symmetric and independent private values we show that the seller s optimal reserve price decreases in his own risk aversion and more so in the first price auction the reserve price also decreases in the buyers risk aversion in the first price auction thus greater risk aversion increases ex post efficiency in both auctions especially that of the first price auction at the interim stage the first price auction is preferred by all buyer types in a lower interval as well as by the seller

auction form preferences of risk averse bid takers we analyze the preferences of a risk averse seller over the class of standard auctions with symmetric and risk neutral bidders assuming that buyers private signals are independently distributed we find that a sealed bid first price auction with an appropriately set reserve price is preferred by all risk averse sellers to any other standard auction in first and second price auctions the more risk averse a seller the lower the seller s optimal reserve price given two first price auctions with reserve prices and entry fees such that both have the same screening level all risk averse sellers prefer the auction with the lower entry fee

what is the cost of low participation in french timber auctions how much is the timber from public forests worth how can the public forest service define a fair market price for standing timber lots what is the cost of low participation in french timber auctions to estimate the value of a timber lot we adopt the transaction evidence appraisal approach using data from timber auctions in lorraine eastern france accounting for the facts that i the seller s reserve prices are secret ii there remain many unsold lots and iii the number of bidders varies from one auction to another taking into account the endogenous participation in our hedonic price equation for the highest bid we estimate that compared to lots that receive two bids the highest bid is 22 lower when there is only one bid and 37 higher when there are three or more bids

subjective probabilities in games an application to the overbidding puzzle this article illustrates how the joint elicitation of subjective probabilities and preferences may help us understand behavior in games we conduct an experiment to test whether biased probabilistic beliefs may explain overbidding in first price auctions the experimental outcomes indicate that subjects underestimate their probability of winning the auction and indeed overbid when provided with feedback on the precision of their predictions subjects learn to make better predictions and to curb significantly overbidding the structural estimation of different behavioral models suggests that biased probabilistic beliefs are a driving force behind overbidding and that risk aversion plays a lesser role than previously believed

equilibrium exhaustible resource price dynamics we develop equilibrium models of exhaustible resource markets with endogenous extraction choices and prices our analysis demonstrates how adjustment costs can generate oil and gas forward price dynamics with two factors consistent with the behavior these commodities exhibit in the schwartz and smith 2000 calibration our two factor model predicts that stochastic volatility will arise in these markets as a natural consequence of production adjustments however and we provide supporting empirical evidence differences between endogenous price processes from our general equilibrium model and exogenous processes in earlier papers can generate significant differences in both financial and real option values

auctions with price proportional benefits to bidders after some auctions including amish estate sales and buyer rings knockout auctions each bidder receives a share of the revenue generated by the auction we show that in the symmetric case equilibrium bids in both first price sealed bid auctions and oral auctions increase as each bidder s share increases in the case of independent signals oral auctions result in higher expected equilibrium prices than do first price sealed bid auctions journal of economic literature classification number d44

an assessment of four popular auction mechanisms in the siting of nimby facilities some experimental evidence the issue of locating locally unfriendly but socially beneficial facilities such as landfills and power stations is an important public policy concern in many countries local residents in the area where such facilities are to be located tend to exhibit strong opposition no doubt due to the asymmetric distribution of the costs and benefits of such not in my backyard nimby facilities a potentially useful mechanism for the siting of such facilities is by compensation auctions which attempt to incorporate the market mechanism into the decision making process in such auctions communities name the compensation they require to host such facilities and the community demanding the least amount of compensation gets to host the facility this research attempts to evaluate the performance of such compensation auctions using laboratory exepriments four popular auction formats are evaluated first and second price and all pay first and second price sealed bid auctions the latter two formats correspond to th

neoclassical theory versus prospect theory evidence from the marketplace several experimental studies have provided evidence that suggest indifference curves have a kink around the current endowment level these results which clearly contradict closely held economic doctrines have led some influential commentators to call for an entirely new economic paradigm to displace conventional neoclassical theory e g prospect theory which invokes psychological effects this paper pits neoclassical theory against prospect theory by investigating data drawn from more than 375 subjects actively participating in a well functioning marketplace the pattern of results suggests that prospect theory adequately organizes behavior among inexperienced consumers but consumers with intense market experience behave largely in accordance with neoclassical predictions moreover the data are consistent with the notion that consumers learn to overcome the endowment effect in situations beyond specific problems they have previously encountered this transference of behavior across domains has important implications in both a positive and normative sense

prospect theory much ado about nothing prospect theory is a paradigm challenging the expected utility paradigm one of the fundamental components of prospect theory is the s shaped value function the value function is mainly justified by experimental investigation of the certainty equivalents of prospects confined either to the negative or to the positive domain but not of mixed prospects which characterize most actual investments we conduct an experimental study withmixed prospects using for the first time recently developed investment criteria called prospect stochastic dominance psd and markowitz stochastic dominance msd we reject the s shaped value function showing thatat least 62 76 of the subjects cannot be characterized by such preferences we find support for the markowitz utility function which is a reversed s shaped function exactly the opposite of the prospect theory value function it is possible that the previous results supporting the s shaped value function are distorted because the prospects had only positive or only negative outcomes presenting hypothetical situations which individuals do not usually face and which are certainly not common in financial markets

developments in non expected utility theory the hunt for a descriptive theory of choice under risk this article reviews recent developments in the economic theory of individual decision making under risk since the 1950s it has been known that individual choices violate the standard model of expected utility in predictable ways considerable research effort has now been devoted to the project of developing a superior descriptive model following an overview of non expected utility theories which distinguishes between conventional and non conventional approaches the paper seeks to assess these alternative models in terms of empirical success using laboratory and field data and theoretical usefulness the closing sections reflect on some new directions emerging in this literature

mean reversion in equilibrium asset prices evidence from the futures term structure we use the term structure of futures prices to test whether investors anticipate mean reversion in spot asset prices the empirical results indicate mean reversion in each market we examine for agricultural commodities and crude oil the magnitude of the estimated mean reversion is large for example point estimates indicate that 44 percent of a typical spot oil price shock is expected to be reversed over the subsequent eight months for metals the degree of mean reversion is substantially less but still statistically significant we detect only weak evidence of mean reversion in financial asset prices in this study we provide evidence of mean reversion in the prices of several real and financial assets rather than examining evidence of ex post reversion using time series of asset prices we use price data from futures contracts with varying delivery horizons to test whether investors expect asset prices to revert this approach offers two advantages first since futures prices are readily available for many markets our procedure can be implemented for many assets including those for which reliable spot price data is elusive second there is little ambiguity as to the source of any mean reversion detected using our method subject only to the maintained assumption that the no arbitrage cost of carry condition holds our test detects mean reversion that is expected to occur in equilibrium but has no power to detect mean reversion resulting from noise or inefficiencies our methodology focuses on relations between price levels and the slope of the futures term structure defined as the change across delivery dates in the futures prices observed on a given trading date an inverse relation between prices and the futures term slope constitutes evidence that investors expect mean reversion in spot prices to illustrate initially assume there are no

an optimal auction with correlated values and risk aversion abstract we consider an auction setting where the buyers are risk averse with correlated private valuations cara preferences binary types and characterize the optimal mechanism for a risk neutral seller we show that the optimal auction extracts all buyer surplus whenever the correlation is sufficiently strong greater than 1 3 in absolute value no matter how risk averse the buyers are in contrast we note that a sufficiently risk averse seller would not use a full rent extracting mechanism for any positive correlation of the valuations even if the buyers were risk neutral

star shaped probability weighting functions and overbidding in first price auctions there is a debate about whether risk aversion is the main source of overbidding in a first price independent private values auction as an alternative we adopt a non expected utility framework and identify an interpretable property on the probability weighting function which always induces overbidding