theory and behavior of multiple unit discriminative auctions this paper reports the results of controlled experiments designed to test the harrisraviv generalization of the vickrey theory of bidding in multiple unit discriminative auctions the paper also discusses further development of the theory in a way suggested by the experimental results to include bidders with distinct risk preferences in a well known paper vickrey 20 formulated a nash equilibrium model of bidding by risk neutral economic agents in single unit auctions this analysis was subsequently extended in numerous papers vickrey 21 generalized his original model to include multiple unit auctions in which each of n risk neutral bidders can bid on one out of a total of q homogeneous items up for auction where 1 c q n in both of the vickrey papers individual values for the auctioned object s were assumed to be drawn from a uniform distribution holt 12 and riley and samuelson 19 for single unit auctions and harris and raviv 11 for multiple unit auctions have extended the vickrey model to the case in which valuations are from a general distribution function and all agents have identical concave utility functions this paper reports the empirical properties of individual bidding behavior and seller revenue for a group of 28 laboratory experiments designed to test the harris raviv generalization of the vickrey hereafter vhr model of nash equilibrium behavior in multiple unit discriminative auctions in section i we summarize briefly the theoretical results of the vhr model which form the basis for the hypotheses that we test section ii describes the experimental design that we use section iii describes the experimental results and various tests based on the bidding behavior of individual subjects and on aggregate market seller revenue data the results from six of the ten n q parameter designs reported

boundedly rational versus optimization based models of strategic thinking and learning in games harstad and selten s article in this forum performs a valuable service by highlighting the dominance of optimization based models over boundedly rational models in modern microeconomics and questioning whether optimization based models are a better way forward than boundedly rational models this article complements rabin s response to harstad and selten focusing on modeling strategic behavior i consider harstad and selten s examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory commenting on the challenges that remain and the most promising ways forward

loss aversion and learning to bid bidding challenges learning theories even with the same bid experiences vary stochastically the same choice can result in either a gain or a loss in such an environment the question arises of how the nearly universally documented phenomenon of loss aversion affects the adaptive dynamics we analyse the impact of loss aversion in a simple auction using the experienced weighted attraction model of learning our experimental results suggest that individual learning dynamics are highly heterogeneous and affected by loss aversion to different degrees apart from that the experiment shows that loss aversion is not specific to rare decision making

supply side interventions and redistribution we evaluate the eect on welfare of shifting the burden of capi tal income taxes to labor taxes in a dynamic equilibrium model with heterogeneous agents and constant tax rates we calibrate and simu late the economy we nd that lowering capital taxes has two eects i it increases e ciency in terms of aggregate production and ii it redistributes wealth in favor of those agents with a low wage wealth ratio when the parameters of the model are calibrated to match the distribution of income in terms of the wage wealth ratio the redis tributive eect dominates and agents with a high wage wealth ratio would experience a large loss in utility if capital income taxes were eliminated

the optimal mix of flexible and dedicated manufacturing capacities hedging against demand uncertainty abstract a firm that faces uncertain demands for several product groups needs to decide how much of relatively inexpensive dedicated capacity and how much of more expensive flexible capacity to acquire we model this situation as a two stage decision problem investment and allocation we pay particular attention to the dependence of acquisition policy on existing capacities as most firms facing the problem are not likely to be entirely new we show that if initial capacities are lower than the levels that would be optimal in absence of initial capacities the investment decision is a simple acquire up to optimal levels for each capacity type however if some initial capacity is too high the optimal additions to others depend on its value in a non linear yet intuitive fashion we also pose the issue of choosing the degree of flexibility as the realized product mix will affect the performance of partially flexible machines

stationary concepts for experimental 2x2 games five stationary concepts for completely mixed 2 x 2 games are experimentally compared nash equilibrium quantal response equilibrium action sampling equilibrium payoff sampling equilibrium martin j osborne and ariel rubinstein 1998 and impulse balance equilibrium experiments on 12 games 6 constant sum games and 6 nonconstant sum games were run with 12 independent subject groups for each constant sum game and 6 independent subject groups for each nonconstant sum game each independent subject group consisted of four players 1 and four players 2 interacting anonymously over 200 periods with random matching the comparison of the five theories shows that the order of performance from best to worst is as follows impulse balance equilibrium payoff sampling equilibrium action sampling equilibrium quantal response equilibrium nash equilibrium

why aren t developed countries saving abstract national saving rates differ enormously across developed countries but these differences obscure a common trend namely a dramatic decline over time france and italy for example saved over 23 and 19 of national income in 1970 but only 9 and 4 respectively in 2008 japan saved almost 33 in 1970 but only 7 in 2008 and the u s saved around 11 in 1970 but only 1 in 2008 what explains these international and intertemporal differences is it demographics government spending productivity growth or preferences for the u s and france whose saving behavior we study preferences appear to be an important factor american and french societies are placing increasing weight on the welfare of those currently alive particularly contemporaneous older generations government spending also appears to be one of the reasons why france is saving at much lower rates these conclusions emerge from estimating two models in which society makes consumption and labor supply decisions in light of uncertainty over future government spending productivity and social preferences the two models differ in terms of the nature of preference uncertainty and the extent to which current society can control future societies spending and labor supply decisions

games with unique mixed strategy equilibria an experimental study abstract the results of an experiment studying the choices of subjects playing mixed extensions of three variants of simple 2 2 non constant sum strictly competitive games of the same form matching pennies are presented subjects exhibited a variety of behavioral adaptive learning strategies this heterogeneity of individual behavior produced aggregate dynamics whose estimated steady states are quite different from those predicted by the nash equilibria of those stage games with asymmetrical payoff functions the observed aggregative dynamics are well accounted for both by a quantal equilibrium model of mckelvey and palfrey and by a learning model of roth and erev journal of economic literature classification number c72

a comparison of buyer determined and price based multiattribute mechanisms reverse auctions are fast becoming the standard for many procurement activities in the past the majority of such auctions have been solely price based but increasingly attributes other than price affect the auction outcome specifically the buyer uses a scoring function to compare bids and the bid with the highest score wins we investigate two mechanisms commonly used for procurement in business to business markets in a setting in which buyers welfare is affected by exogenous nonprice attributes such as the quality service and past relationships under both mechanisms bidders bid based on price but in the buyer determined mechanism the buyer is free to select the bid that maximizes her surplus while in the price based mechanism the buyer commits to awarding the contract to the low price bidder we find both in theory and in the laboratory that the buyer determined mechanism increases the buyer s welfare only as long as enough suppliers compete if the number of suppliers is small and the correlation between cost and quality is low the buyer is better off with the price based mechanism these findings are intended to help procurement managers make better decisions in designing procurement mechanisms for a variety of settings

do demographics prevent consumption aggregates from reflecting micro level preferences abstract most simulated micro founded macro models use solely consumer demand aggregates in order to estimate preference parameters of a representative consumer for use in policy evaluation focusing on dynamic models with time separable preferences we show that aggregation holds if and only if momentary utility functions fall in the identical shape harmonic absolute risk aversion ishara utility class identifying which parameters of ishara utility functions are allowed to vary over time given this theoretical result it should be easy to empirically reject the aggregation properties that the macroeconomic representative consumer identification approach requires it suffices to show that permanent incomes guaranteeing the same living standard across households of different size violate an affine relationship in order to test the validity of this affine equation we develop a vignette survey that produces appropriate data without demand estimation restrictions imposed by models surprisingly in six countries this equation is not rejected lending support to using consumer demand aggregates

does feedback really matter in one shot first price auctions does the type of posterior feedback affect how people decide in one shot environments we revisit this question in first price auction markets we consider three feedback types minimal only knowing whether winning or not loser also knowing the winning bid and winner knowing the second highest bid if winning filiz ozbay and ozbay 2007 find that loser as opposed to minimal or winner feedback increases bids we use three novel protocols and additionally replicate theirs using a sample of 624 subjects we find that bidders ex ante knowledge of posterior feedback type has no systematic effect on the average bid value ratios

information disclosure in auctions an experiment we report experimental results on the importance of information disclosure policy in first price sealed bid auctions interaction takes place in 10 periods according to a random matching protocol and we control the level of information feedback bidders receive after each period when bidders are informed about the losing bids in previous periods prices are higher than the theoretical prediction however when this information is not revealed the bidding becomes more competitive and the bids come close to the theoretical prediction we suggest that a signaling phenomenon may be important for explaining these results 2002 elsevier science b v all rights reserved

vertical flexibility in supply chains jordan and graves jordan w c s c graves 1995 principles on the benefits of manufacturing process flexibility management sci 41 4 577 594 initiated a stream of research on supply chain flexibility which was furthered by graves and tomlin graves s c b t tomlin 2003 process flexibility in supply chains management sci 49 7 907 919 that examined various structures for achieving horizontal flexibility within a single level of a supply chain in this paper we extend the theory of supply chain flexibility by considering placement of vertical flexibility across multiple stages in a supply chain specifically we consider two types of flexibility logistics flexibility and process flexibility and examine how demand production and supply variability at a single stage impacts the best stage in the supply chain for each type of flexibility under the assumptions that margins are the same regardless of flexibility location capacity investment costs are the same within and across stages a

impulse balance in the newsvendor game abstract one striking behavioral phenomenon is the pull to center bias in the newsvendor game facing stochastic demand subjects tend to order quantities between the expected profit maximizing quantity and mean demand we show that the impulse balance equilibrium which is based on a simple ex post rationality principle along with an equilibrium condition predicts the pull to center bias and other more subtle observations in the laboratory newsvendor game

economic growth and inequality the role of public investment the relationship between growth and inequality is complex after discussing some general background issues motivated by extensive empirical evidence this paper focuses on public investment as a key determinant of the relationship two alternative frameworks each offering sharply contrasting perspectives are presented the first employs the representative consumer theory of distribution where agent heterogeneity originates with wealth endowments it yields an equilibrium in which aggregate dynamics drives distributional dynamics in the second agent heterogeneity arises from idiosyncratic productivity shocks and generates an equilibrium in which distributional dynamics drive growth the impact of government investment on growth and inequality are shown to contrast sharply in the two approaches thus illustrating the complexity of the growth inequality relationship

group dynamics in experimental studies the bertrand paradox revisited abstract different information provision in experimental markets can drastically change subjects behavior considering the repeated bertrand duopoly game of dufwenberg and gneezy dufwenberg m gneezy s u 2000 price competition and market concentration an experimental study international journal of industrial organization 18 7 22 we find that population feedback about the prices in other markets outside a subjects own current market causes group dynamics that prevent prices from convergence to nash equilibrium limited information comprising only the decisions of a subject s own opponent in contrast leads to competitive behavior when we extend the number of periods from 10 to 25 in the full information treatment full we observe a very robust cyclical up and down movement of prices we can explain tacit coordination in our experiment with an extended learning direction model and leadership by example

independent private value auctions bidder behaviour in first second and third price auctions with varying numbers of bidders the symmetric equilibrium of third price auctions is characterized it makes a number of contrasting predictions relative to firms and second price auctions bids exceed private values the marginal effects on bids of an increase in private values is greater than one increasing numbers of bidders reduces bids and risk aversion requires bidding below the risk neutral nash equilibrium in the experiment bidders do not always satisfy the point predictions of the theory however the game theoretic models correctly anticipate at least directionally the important effects of the price rule changes copyright 1993 by royal economic society

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

strategies and evolution in the minority game a multi round strategy experiment abstract minority games are a stylized description of strategic situations with both coordination and competition these games are widely studied using either simulations or laboratory experiments simulations can show the dynamics of aggregate behavior but the results of such simulations depend on the type of strategies used so far experiments provided little guidance on the type of strategies people use because the set of possible strategies is very large we therefore use a multi round strategy method experiment to directly elicit people s strategies between rounds participants can adjust their strategy and test the performance of possible new strategies against strategies from the previous round strategies gathered in the experiment are subjected to an evolutionary competition the strategies people use are very heterogeneous although aggregate outcomes resemble the symmetric nash equilibrium the strategies that survive evolutionary competition achieve much higher levels of coordination

transitional dynamics and the distribution of wealth in a neoclassical growth model abstract the evolution of the personal distribution of wealth in a standard neoclassical growth model is studied if the economy is growing toward the steady state and preferences are such that marginal utility from consumption is infinite finite at some all positive non negative consumption level s then the average saving propensity of agents is positively negatively related to their wealth if the economy is decaying toward the steady state these relationships are reversed if wealth and average saving propensity are positively negatively related the distribution of current period wealth lorenz dominates is lorenz dominated by next period s distribution of wealth

current real business cycle theories and aggregate labor market fluctuations hours worked and the return to working are weakly correlated traditionally the ability to account for this fact has been a litmus test for macroeconomic models existing real business cycle models fail this test dramatically we modify prototypical real business cycle models by allowing government consumption shocks to influence labor market dynamics this modification can in principle bring the models into closer conformity with the data our empirical results indicate that it does

the cyclical and secular behaviour of the labour input comparing efficiency units and hours worked summary a monthly labour input series designed to correct for the fact that all hours worked are not of the same quality is constructed and its properties compared with unadjusted hours worked this efficiency units series is constructed from bls data on hours worked and earnings by age and sex the cyclical fluctuations displayed by the efficiency units series are smaller on average than those displayed by hours worked although the difference is not large however the secular behaviour of the series is quite different hours worked per capita displays a significant positive trend while efficiency units per capita does not

stationary concepts for experimental 2 x 2 games comment reinhard selten and thorsten chmura 2008 recently reported laboratory results for completely mixed 2 x 2 games used to compare nash equilibrium with four other stationary concepts quantal response equilibrium action sampling equilibrium payoff sampling equilibrium and impulse balance equilibrium we reanalyze their data correct some errors and find that nash clearly fits worst while the four other concepts perform about equally well we also report new analysis of other previous experiments that illustrate the importance of the loss aversion hardwired into impulse balance equilibrium when the other non nash concepts are augmented with loss aversion they outperform impulse balance equilibrium

bounded rationality models tasks to become intellectually competitive abstract research in experimental economics has cogently challenged the fundamental precept of neoclassical economics that economic agents optimize the last two decades have seen elaboration of boundedly rational models that try to move away from the optimization approach in ways consistent with experimental findings nonetheless the collection of alternative models has made little headway supplanting the dominant paradigm we delineate key ways in which neoclassical microeconomics holds continuing and compelling advantages over bounded rationality models and suggest via a few examples the sorts of further difficult pushes that would be needed to redress this state of affairs closer collaboration between theoretic modeling and experiments is clearly seen to be necessary jel b40 c72 c90 d01 d21

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

stationary concepts for experimental 2x2 games a reply this is a reply to stationary concepts for experimental 2 x 2 games comment by brunner camerer and goeree which corrects some computational errors in selten and chmura 2008 and extends the comparison of five stationary concepts to data from previous experimental studies we critically discuss their new findings and relate them to the data of selten and chmura 2008 we conclude that the parametric concepts of action sampling equilibrium and payoff sampling equilibrium perform better than quantal response equilibrium and that the non parametric concept of impulse balance equilibrium performs at least as well as quantal response equilibrium

anticipated loser regret in third price auctions abstract losing the auction at an affordable price generates loser regret in third price auctions if bidders anticipate loser regret then in line with the experimental findings in a symmetric equilibrium the bids are more than the risk neutral nash equilibrium

features of experimentally observed bounded rationality abstract on the basis of experimental evidence reported in the literature the paper draws conclusions about the bounded rationality exhibited by human economic behaviour among the topics discussed are presentation effects caused by superficial analysis strategic reasoning and strategy construction based on reciprocity and fairness avoidance of circular concepts in step by step strategic reasoning ex post rationality and learning direction theory presence of both adaptive and analytic approaches to repeated decision tasks and the absence of quantitative expectations and optimization in typical repeated game strategies

price formation in single call markets this paper reports a laboratory experiment designed to examine the price formation process in a simple market institution the single call market the experiment features random values and costs each period so each period generates a new price formation observation other design features are intended to enhance the predictive power of the bayesian nash equilibrium bne theory developed recently for this trading institution we find that the data support several qualitative implications of the bne but that subjects bid and ask behavior is not as responsive to changes in the pricing rule as the bne predictions bids and asks tend to reveal more of the underlying values and costs than predicted particularly when subjects are experienced nevertheless observed trading efficiency falls below the bne prediction the results offer more support for the bne when subjects compete against nash robot opponents a simple learning model accounts for several of the deviations from bne

capital skill complementarity and balanced growth we construct a general equilibrium version of the krusell et al econometrica 68 1029 2000 model with capital skill complementarity we assume several sources of growth simultaneously exogenous growth of skilled and unskilled labour equipment specific technological progress skilled and unskilled labouraugmenting technological progress and hicks neutral technological progress we derive restrictions that make our model consistent with balanced growth a calibrated version of our model can account for the key growth patterns in the us data including those for capital equipment and structures skilled and unskilled labour and output but it fails to explain the long run behaviour of skilled labour wages and consequently the skill premium

rent seeking with regretful agents theory and experiment abstract we investigate both theoretically and experimentally the role that information disclosure has on behavior in all pay environments in which all agents must exert costly effort but only the winner is rewarded through the lens of all pay auctions we show that bidders who have regret concerns when they lose an auction may alter their bids whether or not information about the winning bid is disclosed all losing bidders regret not bidding 0 however when feedback on the winning bid is provided those bidders who lost at an affordable price may regret not bidding more we show that the former effect causes bidders to lower their bids while the latter effect causes bidders to raise their bids our experimental results indicate overbidding whether or not the winning bid is disclosed to losing bidders however disclosing the winning bid leads to even more aggressive bidding increases revenues decreases the frequency of dropouts and also leads to more efficient allocations thus our results show that information disclosure is a powerful tool that mechanism designers may wish to exploit to extract more rents in all pay environments

information and conspiracy in sealed bid auctions abstract this paper examines the allocative properties of the sealed bid institution when different aspects of the available information to bidders are considered specifically we examine a the effect on price determination in repeated sealed bid auctions of post auction revelation of losing bids and b the effect on price determination when conspiratorial discussions are allowed

preference shocks from aggregation time series data evidence we investigate the impact of preference shocks on the aggregate dynamics of the u s economy in the context of a neoclassical growth model derived from aggregation the aggregation result we use is as follows if markets are complete and if agents have identical preferences of the addilog type then the heterogeneous agent economy where agents are subject to idiosyncratic productivity shocks behaves as if there was a representative consumer who faces shocks to preferences and technology we estimate the parameters in the aggregation based model from the aggregate time series data and compute the numerical solution we find that the preference shocks play an important role in the aggregate labor market fluctuations

heterogeneity in capital and skills in a neoclassical stochastic growth model does a heterogeneous agents version of a neoclassical model with labor leisure choice replicate the distributions of consumption and working hours observed in the cross sectional data does incorporating heterogeneity enhance the aggregate performance of the representative agent model we address these questions in a complete market model economy with two sources of heterogeneity initial endowments and non acquired skills we find positive answers to both questions

wealth varying intertemporal elasticities of substitution evidence from panel and aggregate data abstract this paper constructs and estimates a model of consumer preferences in which the intertemporal elasticity of substitution ies of consumption expenditure rises with the level of wealth the purpose of this paper is to measure the effect that systematic variation in the ies of poor and rich consumers has on the ies of aggregate consumption expenditure we find economically significant differences in the ies of poor and rich consumers in indian panel data on the consumption of individual households we also find economically significant differences in the ies measured in aggregate time series data for the u s and india

risk averse behavior in generalized matching pennies games in experimental studies of behavior in 2 2 games with unique mixed strategy equilibria observed choice frequencies are systematically different from mixed strategy nash predictions this paper examines experimental results for a variety of such games and shows that a structural econometric model which incorporates risk aversion into a quantal response equilibrium explains the data very well moreover risk aversion estimates are stable across the different games and are close to those obtained from laboratory and field auction data as well as from individual lottery choice experiments

ex post heterogeneity and the business cycle abstract a temporary heterogeneity in individual skills is introduced in the indivisible labor model studied by rogerson 1984 and hansen 1985 and the model is calibrated and simulated the results suggest that heterogeneity may be a very important factor affecting the volatilities and comovements of output and other variables the results also show that the average quality variation of employed workers can be as much as 16 percent of the output volatility

competitive burnout theory and experimental evidence abstract we examine equilibrium selection in a two stage sequential elimination contest in which contestants compete for a single prize this game has a continuum of equilibria only one of which satisfies the coalition proof nash equilibrium cpne refinement that equilibrium involves burning out by using all of one s resources in the first stage it is pareto dominated by many other equilibria we find that cpne predicts well when four people compete but not when eight people compete for two second stage spots using a cognitive hierarchy ch framework we show that when the number of players and the mean number of thinking steps are large the ch prediction involves burning out this provides a partial explanation of our results we also develop a formal argument as to why cpne logic is more compelling with more players we conclude that more competition leads to higher bids and that burning out is indeed a competitive phenomenon

distributional dynamics in a neoclassical growth model the role of elastic labor supply we examine the evolution of the distributions of wealth and income in a ramsey model in which agents differ in their initial capital endowment and where the labor supply is endogenous the assumption that the utility function is homogeneous implies that the macroeconomic equilibrium is independent of the distribution of wealth and allows us to characterize fully income and wealth dynamics we find that although the dynamics of the distribution of wealth are similar under fixed and flexible labor those of the income distribution are not in response to a structural change income inequality may move in opposite ways depending on whether or not the labor supply is fixed

an intertemporal general equilibrium asset pricing model the case of diffusion information this paper provides sufficient conditions for the equilibrium price system and a vector of exogenously specified state variable processes to form a diffusion process in a pure exchange economy the conditions involve smoothness of agents utility functions and certain nice properties of the aggregate endowment process and the dividend processes of traded assets in place of the dynamic programming a martingale representation technique is utilized to characterize equilibrium portfolio policies this technique is useful even when there does not exist a finite dimensional markov structure in the economy and thus the markovian stochastic dynamic programming is not applicable a gents are shown to hold certain hedging mutual funds and the riskless asset in contrast to earlier results the market portfolio does not have a special role in hedging since the markets are dynamically complete when there exists a finite dimensional markov system in the economy the dimension of the hedging demand identified through the markovian dynamic programming may be much larger than that identified by the martingale method copyright 1987 by the econometric society

the effects of payoff magnitude and heterogeneity on behavior in 2 2 games with unique mixed strategy equilibria the logit version of quantal response equilibrium predicts that equilibrium behavior in games will vary systematically with payoff magnitudes if all other factors are held constant including the nash equilibria of the game we explore this in the context of a set of asymmetric 2x2 games with unique totally mixed strategy equilibria the data provide little support for the payoff magnitude predictions of the logit equilibrium model we extend the theoretical quantal response equilibrium model to allow for heterogeneity and find that the data fit the heterogeneous version of the theory significantly better

individual behavior of first price auctions the importance of information feedback in computerized experimental markets abstract this article reports the results of an individual choice experiment designed to test the nash equilibrium predictions of the first price sealed bid auction a subject faced in 100 auctions always the same resale value and competed with computer simulated bids the design used between subjects variation and involved information feedback as the treatment variable earlier experimental work on first price auctions has frequently reported an overbidding relative to the risk neutral nash equilibrium our data provide evidence that overbidding can be fostered by the standard information feedback in auction experiments which after each auction reveals the winning bid only by means of learning direction theory we explain the individual bidding dynamics in our experiment finally we apply impulse balance theory and make long run predictions of individual bidding behavior

optimal investment in product flexible manufacturing capacity this paper presents a model and an analysis of the cost flexibility tradeoffs involved in investing in product flexible manufacturing capacity flexible capacity provides a firm with the ability to respond to a wide variety of future demand outcomes but at the expense of the increased cost of acquiring flexible manufacturing capacity as compared with dedicated or nonflexible capacity we formulate the product flexible manufacturing capacity investment decision as a two stage stochastic program in the first stage the firm must make its investment decision in manufacturing capacity before the resolution of uncertainty in product demand in the second stage after demand for products are known the firm implements its production decisions constrained by the first stage investments the main contributions of this paper are threefold first we develop a model of the firm s flexible manufacturing investment decision that conceptually captures some of the key characteristics of this complex decision probl

impulse balance equilibrium and feedback in first price auctions abstract experimental sealed bid first price auctions with private values in which feedback on the losing bids is provided yield lower revenues than auctions where this feedback is not given the concept of weighted impulse balance equilibrium which is based on a principle of ex post rationality and incorporates a concern for social comparison captures the data

a time series analysis of real wages consumption and asset returns summary this paper re examines whether the time series properties of aggregate consumption real wages and asset returns can be explained by a neoclassical model previous empirical rejections of the model have suggested that the optimal labour contract model might be appropriate for understanding the time series properties of the real wage rate and consumption we show that an optimal contract model restricts the long run relation of the real wage rate and consumption we exploit this long run restriction cointegration restriction for estimating and testing the model using ogaki and park s 1989 cointegration approach this long run restriction involves a parameter that we call the long run intertemporal elasticity of substitution ies for non durable consumption but does not involve the ies for leisure this allows us to estimate the long run ies for non durable consumption from a cointegrating regression tests for the null of cointegration do not reject our model as a further analysis our estimates of the long run ies for non durable consumption are used to estimate the discount factor and a coefficient of time nonseparability using hansen s 1982 generalized method of moments we form a specification test for our model a la hausman 1978 from these two steps this specification test does not reject our model this paper re examines whether the time series properties of aggregate consumption real wages and asset returns are consistent with a simple neoclassical representative agent economy previous empirical explorations of this issue have rejected the neoclassical model in large part because the marginal rate of substitution between consumption and leisure does not equal the real wage as is implied by the the first order conditions of the model in this paper we argue that an optimal labour contracting model is more appropriate for understanding the time series behaviour of real wages and consumption we show that a version of the optimal contract model restricts the long run relation between real wages and consumption we exploit this longrun restriction ri cointegration restriction to estimate preference parameters and test the model first we employ the cointegration approach suggested by ogaki and park 1989 to estimate the long run intertemporal elasticity of substitution for non durable consumption from a cointegrating regression we test the model by testing for the cointegration restriction

life cycle economies and aggregate fluctuations do the implications for business cycle issues change when we switch from studying infinitely lived representative agent models to more sophisticated demographic structures with finitely lived agents this article addresses that question by using a large overlapping generations model that is calibrated to u s demographic properties microeconomic evidence and national income and product accounts the finding is that the answers obtained are basically the same for the two kinds of models the article also explores the relative volatility of hours across age groups an issue that cannot be addressed by using the infinitely lived representative agent abstraction

taxation and income distribution dynamics in a neoclassical growth model we examine how changes in tax policies affect the dynamics of the distributions of wealth and income in a ramsey model in which agents differ in their initial capital endowment the endogeneity of the labor supply plays a crucial role in determining inequality as tax changes that affect hours of work will affect the distribution of wealth and income reinforcing or offsetting the direct redistributive impact of taxes our results indicate that tax policies that reduce the labor supply are associated with lower output but also with a more equal distribution of after tax income we illustrate these effects by examining the impact of recent tax changes observed in the us and in european economies

theory and misbehavior of first price auctions recent experimental evidence appears to reject simple nash equilibrium models of bidding behavior in first price auctions the author presents a methodological critique of this evidence existing tests have concentrated on deviations of subjects from predictions in the message space of the action bid deviations the author suggests that it is more natural to evaluate subject behavior in expected payoff space he concludes that the evidence against the simple models is not significant enough to warrant their rejection copyright 1989 by american economic association

the business cycle human capital accumulation nexus and its effect on hours worked volatility abstract this paper studies hours worked volatility and the cyclicality of human capital investments by embedding a ben porath life cycle model of human capital accumulation into an rbc setting agents differ across two dimensions age and productivity in learning our results show that individuals invest more in human capital during economic downturns however human capital accumulation is more counter cyclical for young and low productivity individuals because they face a lower opportunity cost of education and a higher marginal product of human capital these results are confirmed empirically using us data from the current population survey and the american time use survey in addition the paper contributes to the rbc literature by showing that the model s business cycle properties in particular hours worked volatility are sensitive to assumptions of heterogeneity introducing heterogeneity in productivity increases the volatility of aggregate hours worked and changes the life cycle profile for hours volatility to better match the data

process flexibility in supply chains process flexibility whereby a production facility can produce multiple products is a critical design consideration in multiproduct supply chains facing uncertain demand the challenge is to determine a cost effective flexibility configuration that is able to meet the demand with high likelihood in this paper we present a framework for analyzing the benefits from flexibility in multistage supply chains we find two phenomena stage spanning bottlenecks and floating bottlenecks neither of which are present in single stage supply chains which reduce the effectiveness of a flexibility configuration we develop a flexibility measureg and show that increasing this measure results in greater protection from these supply chain inefficiencies we also identify flexibility guidelines that perform very well for multistage supply chains these guidelines employ and adapt the single stage chaining strategy of jordan and graves 1995 to multistage supply chains