position auctions with consumer search this paper examines a model in which advertisers bid for sponsored link positions on a search engine the value advertisers derive from each position is endogenized as coming from sales to a population of consumers who make rational inferences about rm qualities and search optimally consumer search strategies equilibrium bidding and the welfare benets of position auctions are analyzed implications for reserve prices and a number of other auction design questions are discussed

revenue maximizing rankings for online platforms with quality sensitive consumers when a customer searches for a keyword at a classified ads website at an online retailer or at a search engine se the platform has exponentially many choices in how to sort the output to the query the two extremes are a to consider a ranking based on relevance only which attracts more customers in the long run because of perceived quality and b to consider a ranking based on the expected revenue to be generated by immediate conversions which maximizes short term revenue typically these two objectives are not perfectly positively correlated and hence the main question is what middle ground between them should be chosen we introduce stochastic models and propose effective solution methods that can be used to optimize the ranking considering long term revenues a key feature of our model is that customers are quality sensitive and are attracted to the platform or driven away depending on the average relevance of the output the proposed methods are of crucial importance in e business and encompass i classified ad websites which can favor paid ads by ranking them higher ii online retailers which can rank products they sell according to buyers interests and or the margins these products have iii ses which can position the content that they serve higher in the output page than third party content to keep users in their platforms for longer and earn more this goes in detriment of just offering rankings based on relevance only and is directly linked to the current search neutrality debate

income resources and electricity mix this paper presents evidence on a national level electricity ladder which sees countries transition toward coal and natural gas and finally nuclear power and modern renewables such as wind power for their electricity needs as they develop the extent to which countries climb the electricity ladder is dependent on energy endowments the results imply that the environmental implications of economic development differ in countries with different energy resource endowments an effective global carbon mitigation strategy will require developing countries to leapfrog the middle rungs of the electricity ladder

search platforms showrooming and price parity clauses we provide a model in which consumers can search for rms directly or through a platform the platform lowers search costs and provides convenience benets but charges rms for the transactions it facilitates in equilibrium we show consumers buy through the platform despite rms setting higher prices on the platform higher prices on the platform give rise to the possibility of showrooming in which consumers search on the platform but then switch and buy directly to take advantage of lower direct prices in settings like this search platforms like amazon s marketplace and booking com have adopted price parity clauses requiring rms oer their best prices on the platform arguing this is needed to prevent showrooming we use our model to evaluate the implications of showrooming and price parity clauses

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

population aging and carbon emissions in oecd countries accounting for life cycle and cohort effects this paper investigates the relationship between emissions of carbon dioxide and the ongoing process of demographic transition in oecd countries our research is motivated by suggestions in the literature that emission relevant consumption patterns may depend on the position in the life cycle and on the birth cohort to which people belong we augment standard macroeconomic emission regressions by including the age and cohort composition of the population our estimation results on a panel of data for 26 countries spanning the period 1960 2005 suggest that both life cycle and cohort effects belong in a macroeconomic emission function for carbon dioxide we find that shifts in both the age and the cohort composition have contributed to rising carbon emissions in oecd countries

the informativeness of on line advertising abstract sending general advertisements with inflationary claims may attract additional visitors with whom an advertiser is poorly matched this is costly when ads are priced per click because many visitors clickers will not purchase this renders per click advertising particularly conducive to the transmission of information via ads the admissibility of information transmission depends not only on advertiser behaviour but also upon consumers interpretation of and trust in ads in less conducive environments consumers quickly learn to place little stock in the claims they see advertised this mechanism undermines the ability of advertisers and consumers to communicate under per impression or per sale fee structures consumers benefit from increased informativeness but distortions introduced by the market power given to advertisers imply that society may be better off with no information transmission taking place

estimating the demand for a new technology bt cotton and insecticide policies this article examines the potential demand for bt cotton in the southeast from information gathered in the first year of commercialization we combine revealed preference rp data on adoption of bt cotton varieties with stated preference sp data on willingness to adopt to estimate demand using a double bounded maximum likelihood procedure using estimated demand equations we simulate the costs of reducing conventional insecticide applications through subsidization of bt cotton results indicate that reducing cotton insecticide applications by 40 in the southeast would require a 21 acre subsidy with total annual program costs between 53 million and 60 million

price directed consumer search abstract we extend stahl s 1989 model to a setting with differentiated products to study the effects of price directed consumer search consumers engage in costly search to find out whether products meet their needs consumer search is directed by prices when they are observable before search in contrast to the case in which prices are discovered only after search where search is naturally random the equilibrium under price directed search differs substantially from that under random search despite certain similarities we show that as search costs decrease sales become more likely and firms earn higher expected profits under price directed search whereas the opposite holds under random search moreover compared with random search under price directed search firms expected profits are always lower but consumer surplus and total welfare are higher provided that the search cost is sufficiently small

internet advertising and the generalized second price auction selling billions of dollars worth of keywords we investigate the generalized second price gsp auction a new mechanism used by search engines to sell online advertising although gsp looks similar to the vickrey clarke groves vcg mechanism its properties are very different unlike the vcg mechanism gsp generally does not have an equilibrium in dominant strategies and truth telling is not an equilibrium of gsp to analyze the properties of gsp we describe the generalized english auction that corresponds to gsp and show that it has a unique equilibrium this is an ex post equilibrium with the same payoffs to all players as the dominant strategy equilibrium of vcg

the efficient estimation of econometric models with rational expectations the efficient estimation of econometric models with rational expectations by the substitution method usually entails the use of a non linear simultaneous equations estimator and hence is not very attractive computationally it is shown that for a wide class of problems efficient estimates can also be obtained with standard estimation methods if instead an errors in variables approach is used for many other problems although not providing fully efficient estimates because rationality is not imposed the errors in variables method will still have a strong appeal because otherwise it uses all of the structural information in the model unlike the substitution method when an incomplete information set is used it guarantees consistent estimates and it is easy to compute

imperfect price deflation in production systems numeraire prices that are measured with error create challenges for econometric estimation a straightforward approach for a model with linear input demands such as generated from a quadratic normalized profit function is proposed where the numeraire price is measured with error numeraire measurement error is likely because expected output price is measured imperfectly by actual output price an approach using generalized method of moments is developed to estimate such errors in variables systems that avoids use of extra sample data or additional structural specifications monte carlo examination of small sample properties shows promise measurement error is statistically significant using aggregate u s agricultural data

advertising for attention in a consumer search model we model the idea that when consumers search for products they first visit the firm whose advertising is most salient the gains a firm derives from being visited early increase in search costs so equilibrium advertising increases as search costs rise as a result higher search costs may decrease both consumer welfare and firm profits we extend the basic model by allowing for firm heterogeneity in advertising costs firms that raise attention more easily advertise more but also charge lower prices and obtain higher profits as advertising cost asymmetries increase consumer surplus falls and aggregate profits rise

determinants of residential space heating expenditures in germany abstract we first examine the determinants of household expenditures on space heating and hot water supply in germany a number of socio economic characteristics of households are included along with building characteristics our analysis covers information on more than 12 000 households in germany for the years 1998 and 2003 the analysis continues by investigating whether different kinds of households are affected differently by increases in energy prices households in owner occupied properties are less affected compared to those in rented accommodation this could be because owners are more likely to have installed energy efficient heating and hot water supply systems and landlords have less of an incentive to improve the conditions of their rented accommodations an energy policy targeting especially the latter group might benefit not only households in rented accommodation but might also increase energy efficiency and reduce greenhouse gas emissions as well

a position paradox in sponsored search auctions we study the bidding strategies of vertically differentiated firms that bid for sponsored search advertisement positions for a keyword at a search engine we explicitly model how consumers navigate and click on sponsored links based on their knowledge and beliefs about firm qualities our model yields several interesting insights a main counterintuitive result we focus on is the position paradox the paradox is that a superior firm may bid lower than an inferior firm and obtain a position below it yet it still obtains more clicks than the inferior firm under a pay per impression mechanism the inferior firm wants to be at the top where more consumers click on its link whereas the superior firm is better off by placing its link at a lower position because it pays a smaller advertising fee but some consumers will still reach it in search of the higher quality firm under a pay per click mechanism the inferior firm has an even stronger incentive to be at the top because now it only has to pay for the consumers who do not know the firms reputations and therefore can bid more aggressively interestingly as the quality premium for the superior firm increases and or if more consumers know the identity of the superior firm the incentive for the inferior firm to be at the top may increase contrary to conventional belief we find that the search engine may have the incentive to overweight the inferior firm s bid and strategically create the position paradox to increase overall clicks by consumers to validate our model we analyze a data set from a popular korean search engine firm and find that i a large proportion of auction outcomes in the data show the position paradox and ii sharp predictions from our model are validated in the data

risk behavior and rational expectations in the u s broiler market this study examines the empirical implications of extending the rational expectations hypothesis reh to include price uncertainty a general estimation framework that incorporates both the restrictions on structural parameters and the variance covariance terms is developed garch time series processes are used to generate time varying expectations of both the means and the variances of exogenous variables the empirical application is with a quarterly model of the u s broiler industry the results indicate that the rational expectation of price variance is an important determinant of broiler supply a formal test indicates that the restrictions implied by the reh cannot be rejected

position effects in search advertising and their moderators a regression discontinuity approach we investigate the causal effect of position in search engine advertising listings on outcomes such as click through rates and sales orders because positions are determined through an auction there are significant selection issues in measuring position effects a simple mean comparison of outcomes at two positions is likely to be biased due to these selection issues additionally experimentation is rendered difficult in this situation by competitors bidding behavior which induces selection biases that cannot be eliminated by randomizing the bids for the focal advertiser econometric approaches to address the selection are rendered infeasible due to the difficulty of finding suitable instruments in this context we show that a regression discontinuity rd approach is feasible to measure causal effects in this important context we apply the approach to a large and unique data set of daily observations containing information on a focal advertiser as well as its major competitors our rd estimates demonstrate that there are significant selection biases in the more naive estimates while a mean comparison of outcomes across positions would indicate very large position effects we find that our rd estimates of these effects are much smaller and exist only in some of the positions we further investigate moderators of these effects position effects are stronger when the advertiser is smaller and when the consumer has low prior experience with the keyword for the advertiser they are weaker when the keyword phrase has specific brand or product information when the ad copy is more specific as in exact matching options and on weekends compared to weekdays

incentive problems in performance based online advertising pricing cost per click vs cost per action the multibillion dollar online advertising industry continues to debate whether to use the cost per click cpc or cost per action cpa pricing model as an industry standard this paper applies the economic framework of incentive contracts to study how these pricing models can lead to risk sharing between the publisher and the advertiser and incentivize them to make efforts that improve the performance of online ads we find that compared with the cpc model the cpa model can better incentivize the publisher to make efforts that can improve the purchase rate however the cpa model can cause an adverse selection problem the winning advertiser tends to have a lower profit margin under the cpa model than under the cpc model we identify the conditions under which the cpa model leads to higher publisher or advertiser payoffs than the cpc model whether publishers or advertisers prefer the cpa model over the cpc model depends on the advertisers risk aversion uncertainty in the product market and the

competitive search obfuscation abstract obfuscation is a literature term referring to sales practices which increase the costs consumers pay to search how does competition shape it how does it shape competition to address these questions we develop a model where each firm can freely commit to any observable degree of search obfuscation which pins down the time cost of searching its product consumers have limited time for browsing around websites this endogenizes consumer information and competition intensity and gives clear predictions about market welfare and surplus division we find that competition for prominence and the fear of frustrating consumers keeps the negative welfare effects of obfuscation low however because obfuscation reduces price awareness and differentiation relaxes price competition the obfuscation choices in the unique equilibrium are persistently positive and different

agricultural productivity revisited this paper describes production accounts for agriculture output is defined as gross production leaving the farm as opposed to real value added inputs are not limited to capital and labor but include intermediate inputs as well we derive index numbers of gross output capital labor and intermediate inputs these data are used to construct indexes of total factor productivity we then compare the contributions of input growth and productivity growth to economic growth the important role of productivity growth in agriculture becomes immediately apparent

supply demand and technology in a multiproduct industry texas field crops the purpose of this paper is to examine the structure of agricultural production for six texas field crops cotton grain sorghum wheat corn rice and hay which account for nearly 95 of recent field crop value specific objectives are to a test the structure of technology to determine i if output and input utilization choices for individual products are independent of production decisions about other outputs and ii if products and or inputs can be consistently aggregated b estimate a coherent set of interrelated supply functions for the six commodities and input demand functions for fertilizer and hired labor because the empirical focus of this paper is specific to one state the results will be of limited value for interpreting specific production relationships elsewhere however the problem is of common interest in production agriculture and the techniques used demonstrate an important application of dual modeling

integration and search engine bias competition authorities all over the world worry that integration between search engines mainly google and publishers could lead to abuses of dominant position in particular one concern is that of own content bias meaning that google would bias its rankings in favor of the publishers it owns or has an interest in to the detriment of competitors and users in order to investigate this issue we develop a theoretical framework in which the search engine i allocates users across publishers and ii competes with publishers to attract advertisers we show that the search engine is biased against publishers that display many ads even without integration although integration may lead to own content bias it can also reduce bias by increasing the value of a marginal consumer to the search engine integration also has a positive eect on users by reducing the nuisance costs due to excessive advertising its net eect is therefore ambiguous in general and we provide sucient conditions for it to be desirable or not

analysing households responsiveness towards socio economic determinants of residential electricity consumption in singapore abstract the research of household electricity use is still relatively new for singapore where apart from some government surveys and sparingly available papers not much has been done to understand the underlying socio economic determinants that affect residents energy demand here we seek to quantify price and income elasticities as well as provide reasonable justification for price asymmetry in singapore using a panel approach across dwelling types and geographical areas we find that households do not react much to prices and that price elasticities may decrease as income rises there is also some evidence of price asymmetry with surprising results putting responsiveness towards price decreases larger than price increases this points towards similar behavioural patterns with the rebound effect for household energy efficiency if found present in future studies our findings suggest that there will only be positive responses towards dynamic pricing and higher churn rates if more transparent information is provided on related cost savings when households are exposed to retail choice in the electricity market after full retail competition is introduced in 2018 in addition a large role will have to come from cultivating the young to engage in sustainable practices to achieve energy efficiency targets

the effects of suburbanization on agriculture this article conceptualizes the effects of suburban population density and land speculation on agricultural production choices prices and profits a dual profit function model and a system of reduced form price equations are used to estimate these effects for new jersey results show that vegetable production is the only subsector to benefit from suburbanization while livestock is the most adversely affected suburbanization reduces responsiveness to agricultural prices and discourages capital and land use the overall impact on profits is positive when capital gains on land are included policy implications for farmland preservation and right to farm legislation are discussed

output supply and input demand system of commercial and backyard poultry producers in indonesia indonesia s domestic broiler production has grown rapidly in part because of a ban on imports of poultry parts and strict inspection and meat certification requirements whether indonesia will continue to protect the domestic broiler sector and import feed grains and other inputs or whether it will directly import meat products is a relevant question to many stakeholders this study uses a normalized quadratic function to estimate the output supply of commercial and backyard broiler producers in indonesia and the input demand for three major inputs day old chicks feed and labor data come from three datasets a 1996 household survey and 1996 and 2000 surveys of commercial producers for the most recent dataset the own price elasticity in both the output supply and feed input demand equations were found to be significant the signs of the elasticities were theoretically consistent with a positive supply and negative demand elasticity the magnitudes of the elasticities were smaller than expected the supply elasticity was 0 285 the inelastic supply explains the high border protection imposed by indonesia which in turn implies that any income driven expansion in the quantity of broiler product demanded would be quickly constrained by rising prices consequently supply from imports would become attractive and would dampen any incentive for growth in the domestic sector this result cast doubt on the long term sustainability of indonesia s import substitution policy regime

a method for calculating profit neutral land set asides changes in land set asides and prices can be coordinated to ensure that the profits of agricultural producers do not change this concept is made operational by estimating and inverting a profit function to obtain an indirect transformation function profit neutral combinations of land set asides and prices for a subsector of brazilian agriculture are calculated

evolution of an aging society and effect on residential energy demand the development of an aged society paired with a growing number of elderly households is expected to increase residential energy demand this study is designed to analyze various factors which determine the energy demand of elderly households and to predict the future of residential energy consumption in an aging society in addition comparing the factors with those in western countries which contain a population of increasing age we try to clarify characteristics of the elderly and residential energy demand then propose possible future subjects for study

in google we trust we examine the incentives of a monopolistic search engine funded by advertising to provide reliable search results we distinguish two types of search results sponsored and organic not paid for organic results are most important in searches for online content while sponsored results are more important in product searches by modeling the underlying markets for online content and offline products we can identify the sources of distortions for each type of result and their interaction this explicit treatment proves crucial for understanding not only spillovers across markets but also fundamental policy issues such as the welfare effects of integration in particular integration of the engine with a small fraction of content providers is welfare enhancing when incentives to distort are stronger for sponsored than organic search but welfare reducing in the opposite case

bayes nash equilibria of the generalized second price auction abstract we develop a bayes nash analysis of the generalized second price gsp auction the multi unit auction used by search engines to sell sponsored advertising positions our main result characterizes the efficient bayes nash equilibrium of the gsp and provides a necessary and sufficient condition that guarantees existence of such an equilibrium with only two positions this condition requires that the click through rate of the second position is sufficiently smaller than that of the first when an efficient equilibrium exists we provide a necessary and sufficient condition for the auction revenue to decrease as click through rates increase interestingly under optimal reserve prices revenue increases with the click through rates of all positions further we prove that no inefficient equilibrium of the gsp can be symmetric our results are in sharp contrast with the previous literature that studied the gsp under complete information

position auctions with dynamic resizing abstract this paper analyzes mechanisms for selling advertising inventory in a position auction in which displaying less than the maximal number of ads means the ads that are shown can be dynamically resized and displayed more prominently i characterize the optimal mechanism with and without dynamic resizing and illustrate how the optimal reserve prices in a vickrey clarke groves mechanism vary with the amount of dynamic resizing and the number of bidders

does advertising serve as a signal evidence from a field experiment in mobile search we develop a field experiment that assesses whether advertising can serve as a signal that enhances consumers evaluations of advertised goods we implement the experiment on a mobile search platform that provides listings and reviews for an archetypal experience good restaurants in collaboration with the platform we randomize about 200 000 users in 13 asian cities into exposure of ads for about 600 local restaurants within the exposure group we randomly vary the disclosure to the consumer of whether a restaurant s listing is a paid ad this enables isolating the effect on outcomes of a user knowing that a listing is sponsored a pure signalling effect we find that this disclosure increases calls to the restaurant by 77 holding fixed all other attributes of the ad the disclosure effect is higher when the consumer uses the platform away from his typical city of search when the uncertainty about restaurant quality is larger and for restaurants that have received fewer ratings in the past on the supply side newer higher rated and more popular restaurants are found to advertise more on the platform and ratings of those that advertised during the experiment are found to be higher two years later taken together we interpret these results as consistent with a signalling equilibrium in which ads serve as implicit signals that enhance the appeal of the advertised restaurants to consumers both consumers and advertisers seem to benefit from the signalling consumers shift choices towards restaurants that are better rated at baseline in the disclosure group compared to the no disclosure group and advertisers gain from the improved outcomes induced by disclosure

personalized pricing and advertising an asymmetric equilibrium analysis we study personalized price competition with costly advertising among n quality cost differentiated firms strategies involve mixing over both prices and whether to advertise in equilibrium only the top two firms advertise earning bertrand like profits welfare losses initially rise then fall with the ad cost with losses due to excessive advertising and sales by the wrong firm when firms are symmetric the symmetric equilibrium yields perverse comparative statics and is unstable our key results apply when demand is elastic when ad costs are heterogeneous and with noise in consumer tastes

trade and the environment a partial synthesis there is an emerging consensus in the environmentalist community opposing free trade while some economists view this as simply another outlet for protectionism recent work has begun to move beyond the rhetoric to probe more deeply into the theoretical and empirical relationships between international trade and environmental quality the purpose of the present paper is twofold we first integrate some of the existing literature by using the simple concepts of general equilibrium pollution supply and demand our survey of the trade and environment literature is more

a model of directed consumer search abstract we present a framework to study directed consumer search firms sell products with two attributes one is readily observable the other is observed only after visiting a firm search is directed as the order of search is influenced by the observable characteristics moreover if prices are readily observable firms also influence search direction by their choice of price we show that when consumers observe prices before search prices and profits are lower than when they do not a lower price then not only retains more consumers but is also more likely to attract them the latter effect makes demand more elastic when consumers observe prices before searching prices decrease in search costs consumer surplus initially increases in search costs but may ultimately decrease

democracy and environmental quality we develop and estimate an econometric model of the relationship between several local and global air pollutants and economic development while allowing for critical aspects of the socio political economic regime of a state we obtain empirical support for our hypothesis that democracy and its associated freedoms provide the conduit through which agents can exercise their preferences for environmental quality more effectively than under an autocratic regime thus leading to decreased concentrations or emissions of pollution however additional factors such as income inequality age distribution education and urbanization may mitigate or exacerbate the net effect of the type of political regime on pollution depending on the underlying societal preferences and the weights assigned to those preferences by the state

consumer heterogeneity and paid search effectiveness a large scale field experiment internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue we present results from a series of large scale field experiments done at ebay that were designed to measure the causal effectiveness of paid search ads because search clicks and purchase intent are correlated we show that returns from paid search are a fraction of non experimental estimates as an extreme case we show that brand keyword ads have no measurable short term benefits for non brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses resulting in average returns that are negative

computational analysis of perfect information position auctions abstract after experimentation with other designs major search engines converged on weighted generalized second price auctions wgsps for selling keyword advertisements theoretical analysis is still not able to settle the question of why they found this design preferable to other alternatives we approach this question in a new way adopting an analytical paradigm we dub computational mechanism analysis specifically we sample position auction games from a given distribution encode them in a computationally efficient representation language compute their nash equilibria and calculate economic quantities of interest we considered seven widely studied valuation models from the literature and three position auction variants we found that wgsp consistently showed the best ads of any position auction measured both by social welfare and expected number of clicks in contrast we found that revenue was extremely variable across auction mechanisms and was highly sensitive to equilibrium selection the preference model and the valuation distribution

capital services in u s agriculture concepts comparisons and the treatment of interest rates this paper begins with a review of the methods and assumptions used to measure capital service flows two data series on capital inputs in u s agriculture are briefly described and compared we show that measures of capital services are sensitive to the treatment of interest rates notably the use of fixed versus variable market rates significantly affects measures of the quantity and productivity of agricultural capital in the united states we conclude that when calculating capital usage in u s agriculture the use of a fixed interest rate generates more plausible estimates than the use of an annual market rate

influential factors of carbon emissions intensity in oecd countries evidence from symbolic regression abstract carbon emissions intensity is used as a yardstick to evaluate the relative extent of carbon emissions of a country to reduce carbon emissions intensity it is crucial to find out the dominant factors that enhance it and take actions to manage them this study is an attempt to employ symbolic regression method to explore the most influential factors of carbon emissions intensity in 34 oecd member countries using data from 1995 to 2014 rooted in genetic programming symbolic regression method can explore the inherent functional structures amidst the variables and could discover the influential factors robotically the results confirm that the influential factors of carbon emissions intensity vary from country to country gdp is found as the most frequent and important factor of carbon emissions intensity in 17 countries each of industrialization and technological innovation is the prominent factor in every 4 countries and each of urbanization total population and foreign direct investment plays a pro active role in 3 individual nations based on the empirical results some policy implications are also conferred

paying for prominence we investigate three ways in which firms can become prominent and thereby influence the order in which consumers consider options first firms can affect an intermediary s sales efforts by means of commission payments when firms pay commission to a salesman the salesman promotes the product with the highest commission and steers ignorant consumers towards the more expensive product second sellers can advertise prices on a price comparison website so that consumers investigate the suitability of products in order of increasing price in such a market equilibrium prices are lower when search costs are higher since a firm s benefit from being investigated first increases with search costs finally consumers might first consider their existing supplier when they purchase a new product which suggests a relatively benign rationale for the prevalence of cross selling in markets such as retail banking

contextual inference in markets on the informational content of product lines context can influence decisions this malleability of choice is usually invoked as evidence that people do not maximize stable preference orderings in a market equilibrium however context conveys payoff relevant information to consumers consequently these consumers rationally violate naive formulations of standard choice theoretic principles i identify informational asymmetries under which apparently anomalous behaviors namely the compromise effect and choice overload arise as market equilibria firms respond to consumers contextual inference in case of the compromise effect a firm may introduce premium loss leaders expensive goods of overly high quality that increase the demand for other goods

demand estimation with expenditure measurement errors on the left and right hand side let x be total consumption expenditures measurement errors in consumer budget allocation models cause unusual problems because errors in the dependent variables consumption on individual goods contribute to errors in the regressor x empirically adequate budget share models like the aids translog and quadratic aids are linear or quadratic in log x it is shown that for these specifications two stage least squares fails to correct for the measurement error a simple technique for recovering consistent estimates from two stage least squares is provided along with an efficient generalized method of moments estimator the method is applied to u k fuel demand data copyright 1996 by mit press

loss functions for predicted click through rates in auctions for online advertising summary we characterize the optimal loss functions for predicted click through rates in auctions for online advertising whereas standard loss functions such as mean squared error or log likelihood severely penalize large mispredictions while imposing little penalty on smaller mistakes a loss function reflecting the true economic loss from mispredictions imposes significant penalties for small mispredictions and only slightly larger penalties on large mispredictions we illustrate that when the model is misspecified using such a loss function can improve economic efficiency but the efficiency gain is likely to be small

search design and broad matching we study decentralized mechanisms for allocating firms into search pools the pools are created in response to noisy preference signals provided by consumers who then browse the pools via costly random sequential search surplus maximizing search pools are implementable in symmetric nash equilibrium full extraction of the maximal surplus is implementable if and only if the distribution of consumer types satisfies a set of simple inequalities which involve the relative fractions of consumers who like different products and the bhattacharyya coefficient of similarity between their conditional signal distributions the optimal mechanism can be simulated by a keyword auction with broad matching jel c78 d44 d82

a simple model of search engine pricing we present a simple model of how a monopolistic search engine optimally determines the average relevance of firms in its search pool in our model there is a continuum of consumers who use the search engine s pool and there is a continuum of firms whose entry to the pool is restricted by a price per click set by the search engine we show that a monopolistic search engine may have an incentive to set a relatively low price per click that encourages low relevance advertisers to enter the search pool in general the ratio between the marginal and average relevance in the search pool induced by the search engine s policy is equal to the ratio between the search engine s profit per consumer and the equilibrium product price these conclusions do not change if the search engine charges a fixed access fee rather than a price per click a search engine is a platform that serves a two sided market it is based on a technology that potentially improves the quality of consumer search before the advent of internet search engines yellow pages were the closest example of a search engine firms pay to be included in the yellow pages with various degrees of prominence the yellow pages organise the set of firms according to some categorisation system in internet environments consumers use search engines by submitting a query in a language dictated by the search engine the objects that the query elicits depend on the search engine s

optimal auction design in two sided markets a key feature of online markets for advertising e g sponsored links is that clicking rates depend on the searchers expectations that the platform selects relevant advertisers this article studies auction design by a platform that maximizes profits in the long run where clicking rates are mechanism dependent in line with the practice of the major search engines the revenue maximizing mechanism is a scoring auction that combines the willingness to pay and the relevance to searchers of advertisers by trading off rent extraction and clicking volume this mechanism works as a cross subsidization device between searchers and advertisers

optimal information disclosure a sender randomly draws a prospect characterized by its profitability to the sender and its relevance to a receiver the receiver observes only a signal provided by the sender and accepts the prospect if his bayesian inference about the prospect s relevance exceeds his opportunity cost the sender s profits are typically maximized by partial information disclosure whereby the receiver is induced to accept less relevant but more profitable prospects switches by pooling them with more relevant but less profitable ones baits extensions include maximizing a weighted sum of sender profits and receiver surplus and allowing the sender to use monetary incentives

travel patterns and environmental effects now and in the future implications of differences in energy consumption among socio economic groups travel patterns among different socio economic groups in sweden are investigated it is shown that elderly persons persons with low incomes and women in general do not travel extensively middle aged persons persons with high incomes and men travel much farther cars are the dominant transportation mode for all population groups aeroplanes are used mostly by high income earners and men while public transportation is mostly used by young people and women energy consumption for the different travel patterns differs substantially men with high incomes consume the most energy with 94 000 mj during one year while elderly women consume 12 000 mj when compared to a calculated sustainable level of energy consumption for travel most population groups are in excess the level for sustainable energy consumption is calculated based on an assumed global potential for renewable energy of 360 ej per year divided equally among the global population a certain share of this energy potential is supposed to be used for travelling a scenario for 2020 is presented in which vehicle energy efficiency has increased and travel patterns have changed from what they are today sustainability can only be reached when both travel patterns and vehicle technology have changed radically differences in energy consumption for travel due to age and gender are likely to remain in the future scientific knowledge from the social domains seems to be important for devising efficient strategies for a sustainable society current focus on policy measures has been mainly on technical issues

optimal auction design and equilibrium selection in sponsored search auctions in analyses of sponsored search auctions for online advertising it is customary to model the dynamic game of incomplete information by considering a static game of complete infor mation this approach is used in benjamin edelman michael ostrovsky and michael schwarz 2007 eos hal r varian 2007 and the subsequent literature modeling complex interactions in uncertain environments as games of complete information has a long history for example the bertrand model of oligopolistic competition posits that companies know their competitors costs based on their experience from prior interactions the use of a static game of complete infor mation often offers important benefits for one it is tractable avoiding complex multi period information sets in a dynamic game furthermore a suitably chosen static game can capture important characteristics of the under lying dynamic game when a game is repeated over an extended period there is good reason to think participants will learn many characteris tics of their counterparts supporting the use of a complete information model yet the use of a static game of complete information is also unsatisfying there is no clear way to identify which if any equilibria of the static game of complete information are a relevant approximation of the equilibria of the dynamic game of incomplete information

prominence and consumer search this article examines the implications of prominence in search markets we model prominence by supposing that the prominent firm will be sampled first by all consumers if there are no systematic quality differences among firms we find that the prominent firm will charge a lower price than its less prominent rivals making a firm prominent will typically lead to higher industry profit but lower consumer surplus and welfare the model is extended by introducing heterogeneous product qualities in which case the firm with the highest quality product has the greatest incentive to become prominent and making it prominent will boost industry profit consumer surplus and welfare

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

persuasive puffery sellers often make claims about product strengths without providing evidence even though such claims are mere puffery we show that they can be credible because talking up any one strength comes at the implicit trade off of not talking up another potential strength puffery pulls in some buyers who value product attributes that are talked up or emphasized while pushing away other buyers who infer that the attributes they value are relative weaknesses when the initial probability of making a sale is low there are more potential buyers to pull in than to push away so puffery is persuasive overall this persuasiveness requires that buyers have some privacy about their preferences so that the seller does not completely pander to them more generally the results show how comparative cheap talk by an expert to a decision maker can be credible and persuasive in standard discrete choice models used throughout marketing economics and other disciplines

keyword search advertising and first page bid estimates a strategic analysis in using the generalized second price gsp auction to sell advertising slots a search engine faces several challenges advertisers do not truthfully bid their valuations and the valuations are uncertain furthermore advertisers are budget constrained in this paper we analyze a stylized model of the first page bid estimate fpbe mechanism first developed by google and demonstrate its advantages in dealing with these challenges we show why and when the fpbe mechanism yields higher profits for the search engine compared with the traditional gsp auction and the gsp auction with advertiser specific minimum bid in the event that a high valuation advertiser is budget constrained the search engine can use the fpbe mechanism to alter the listing order with the intent of keeping the high valuation advertiser in the auction for a longer time the resulting increase in the search engine s profits is not necessarily at the expense of the advertisers because the combined profits of the advertisers and the search engine increase this paper was accepted by j miguel villas boas marketing

evaluating the linearized almost ideal demand system linearizing the almost ideal demand system laids by recourse to the stone share weighted price index is common practice two issues are addressed here first scrutiny of the errors in variables implications of the linearization reveals that not only is the sur estimator inconsistent but a consistent iv estimator cannot be constructed second some alternatives to the green alston elasticities specifically designed for the laids model are developed but neither these nor the green alston elasticities are found to have any advantages over the conventional elasticity formulae some errors in the green alston 1990 paper are corrected the inconsistency and elasticity issues are documented by a monte carlo investigation

estimating individual driving distance by car and public transport use in sweden how much to drive and how much to use public transport are modelled as three and two level decisions respectively based on micro data for sweden the choices whether to have a car whether to drive given access to a car and how much to drive given that the individual drives at all are then estimated using a three equation model also after correcting for other variables such as income men are driving much more and using less public transport compared to women people living in big cities are less likely to drive but those who do are on average driving about as much as others age and access to company cars are also important determinants for travel behaviour but being a member of an environmental organization is not driving increases with income but to a lower degree compared to most aggregated studies on national level the difference is explained in a model with income dependent structural changes implying that it becomes more difficult to live without a car when average income increases

investment in u s agriculture resource adjustment problems in u s agriculture are motivated against the background of the farm problem the adjustment cost hypothesis is invoked to specify and estimate consistently a system of dynamic investment demand and output supply equations by utilizing recent advances in dynamic duality theory the investment demand equations assume the form of a multivariate flexible accelerator results indicate that labor capital services and land exhibited quasi fixity while intermediate materials were a variable factor this can be construed as a form of asset fixity within aggregate u s agriculture the univariate flexible accelerator hypothesis is rejected

can prominence matter even in an almost frictionless market consumer search on the internet is rarely random sponsored links appear higher up a webpage and consumers often click them firms also bid aggressively for these prominent positions at the top of the page but why should prominence matter when visiting an additional website is almost costless i present a model in which consumers know their valuations for the products offered in the market but do not know which retailer sells which product i show that a prominent retailer earns significantly more profit than other firms even when the cost of searching websites and comparing products is essentially zero