declining values and the afternoon effect evidence from art auctions we study the order of sale in art auctions the final bid relative to the auctioneer s estimated price declines throughout the course of an auction a theoretical model shows that in an auction ordered by declining valuation even in the presence of risk neutral strategic bidders the price received relative to the estimate for later items in an auction should be less than the price relative to the estimate for earlier items furthermore ordering heterogeneous items by value maximizes revenue for the auctioneer

bidding behavior at sequential first price auctions with out supply uncertainty a laboratory analysis abstract we report on a series of experiments that test the effects of an uncertain supply on bidding behavior and prices in sequential first price auctions with private independent values and unit demands supply is assumed uncertain when buyers do not know the exact number of units to be sold i e the length of the sequence we observe an important overbidding in all but the last stage of a sequence no matter whether supply is certain and a non monotone behavior when supply is certain yet the data qualitatively support most stage to stage bid predictions and the price trend predictions for risk neutral bidders

learning by bidding we analyze a dynamic second price auction with an informed bidder and an uninformed bidder who upon seeing a posted price learns whether his valuation is above that price in the essentially unique equilibrium an informed bidder bids in the first period if her valuation is below some cutoff and bids only in the last period otherwise an uninformed bidder bids in every period to optimally change the price unless the price is above his valuation or he is the high bidder this model also provides a rationale behind the use of a secret reserve price in private value settings

art as an investment and conspicuous consumption good ments art is also a consumption good art owners take pleasure in its intrinsic value e g for aesthetic pleasure or as a storehouse of an artist s deftness and to the extent that it is a luxury good they derive additional enjoyment from the signal of wealth that owning a masterpiece transmits it is the mixture of pecuniary and nonpecuniary payoffs to ownership that makes artworks both compelling to purchase and difficult to value i exploit this insight to explain why the measured risk premium of a portfolio of artworks is low compared to other risky assets in a consumption based pricing model an asset s risk premium is a function of the covariance of its returns with agents marginal utility of consump tion agents need to be compensated if the asset pays off in a period of already high utility as a luxury good relative art demand is an increasing function of wealth therefore positive shocks to income increase the demand price and returns to art in periods of high consumption utility implying a high risk premium this intuition is at odds with empirical studies that quantify the average financial returns of paintings relative to more traditional investment vehicles these studies find that art 1 often underperforms relative to equities and bonds while there have been

wage and technology dispersion this paper explains why firms with identical opportunities may use different technologies and offer different wages our key assumption is that workers must engage in costly search in order to gather information about jobs stigler 1961 in equilibrium some firms adopt high fixed cost high productivity technologies offer high wages and fill job openings quickly other firms adopt less capital intensive technologies and offer low wages hiring mostly uninformed workers in equilibrium the amount of wage dispersion leaves workers indifferent about whether to gather information and the fraction of informed workers leaves firms indifferent about their wage and technology choice we show that worker search which would appear to be a rent seeking activity in partial equilibrium may be efficiency enhancing in general equilibrium

optimal dynamic pricing with inventories abstract we characterize optimal dynamic pricing by a monopolist with a finite stock of goods to sell we show that the monopolist finds it optimal to charge a price that increases monotonically as his stock depletes

scale economies and the volume of trade in this paper we split the number of actual years of schooling into five components effective years repeated years skipped years inefficient routing years and dropout years estimation of earnings equations using these explanatory variables produces some interesting empirical and theoretical results the main empirical finding is that the concepts of actual and effective years of schooling that are usually used in the estimation of earnings equations are statistically inferior to our classification both concepts pro

sequential auctions theory and evidence from the seattle fur exchange we develop a model that incorporates salient features of the seattle fur exchange identical lots of furs are auctioned sequentially bids must be raised by specified increments and the winner of a lot has the privilege of beginning the bidding on the subsequent lot predictions of the theory are consistent with the data revenue implications of the theory are also explored

how valuable is a good reputation a sample selection model of internet auctions on the online auction site ebay by convention sellers do not ship goods to winning bidders until after they have received payment so there is an opportunity for sellers to take advantage of bidders trust realizing this the designers of ebay created a system that relies on self enforcement using reputation several recent studies have found that bidders give little or no reward to sellers who have better reputations i show that in fact sellers are strongly rewarded for the first few reports that they have behaved honestly but marginal returns to additional reports are severely decreasing

outside options another reason to choose the first price auction abstract in this paper we study equilibrium and experimental bidding behaviour in first price and second price auctions with outside options we find that bidders do respond to outside options and to variations of common knowledge about competitors outside options however overbidding in first price auctions is significantly higher with outside options than without first price auctions yield more revenue than second price auctions this revenue premium is significantly higher with outside options in second price auctions the introduction of outside options has only a small effect

auction guarantees for works of art abstract this paper addresses the question of whether auction guarantees change the bidding environment and whether they cause a change in price once the value of an item is taken into account we analyze both the cases of third party guarantees and in house guarantees we use two datasets one of christie s and sotheby s contemporary and impressionist evening sales from january 2010 to february 2012 and another larger dataset consisting of all items auctioned at christie s from 2001 to may 2011 while more expensive items are more likely to have guarantees we find little empirical evidence to suggest an effect on price from the guarantee itself once the value of the item is taken into account

regional integration in china a statistical model abstract we illustrate that a statistical model can be used to gauge the degree of market integration the model is applied to the case of china which is undergoing transition from a central planning to a market economy and there is a growing interest as to the evolution of its market integration

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

when rational sellers face nonrational buyers evidence from herding on ebay people often observe others decisions before deciding themselves using ebay data for dvd auctions we explore the consequences of neglecting nonsalient information when making such inferences we show that bidders herd into auctions with more existing bids even if these are a signal of no longer available lower starting prices rather than of higher quality bidders bidding a given dollar amount are less likely to win low starting price auctions and pay more for them when they do win experienced bidders are less likely to bid on low starting price auctions remarkably the seller side of the market is in equilibrium because expected revenues are nearly identical for high and low starting prices

dynamic pricing behavior in perishable goods markets evidence from secondary markets for major league baseball tickets sellers of perishable goods increasingly use dynamic pricing strategies as technology makes it easier to change prices and track inventory this paper tests how accurately theoretical models of dynamic pricing describe sellers behavior in secondary markets for event tickets a classic example of a perishable good it shows that the simplest dynamic pricing models describe very accurately both the pricing problem faced by sellers and how they behave explaining why sellers cut prices dramatically by 40 percent or more as an event approaches the estimates also imply that dynamic pricing is valuable raising the average seller s expected payoff by around 16 percent

shrouded attributes and information suppression evidence from the field we use eld and natural experiments in online auctions to study the revenue eect of varying the level and disclosure of shipping charges our main ndings are 1 disclosure aects revenues for low shipping charges a seller is better odisclosing 2 increasing shipping charges boosts revenues particularly when these charges are hidden and 3 the level and disclosure of the shipping charge have little eect on the number of bidders attracted to an auction

does the sun shine on art prices this paper examines how variation in mood influences subjective risk and hence auction prices for art in london during the period 1990 2007 the private value of an object is closely related to taste and mood which is proxied for by the variation in weather using a unique data set that includes presale estimates for paintings sold through sotheby s and christie s auction houses as well as weather data for london from the british atmospheric data centre we find that the lower part of the price distribution is populated with paintings with a relative high private value whereas in the upper part prices are driven primarily by the common value characteristics our findings have important implications for collectors and investors in the art market

a study of the internal organization of a bidding cartel this paper examines bidding in over 1 700 knockout auctions used by a bidding cartel or ring of stamp dealers in the 1990s the knockout was conducted using a variant of the model studied by daniel graham robert marshall and jean francois richard 1990 following a reduced form examination of these data damages induced inefficiency and the ring s benefit from colluding are estimated using a structural model in the spirit of emmanuel guerre isabelle perrigne and quang vuong 2000 a notable finding is that nonring bidders suffered damages that were of the same order of magnitude as those of the sellers

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

a decision support framework for evaluating revenue performance in sequential purchase contexts abstract this paper studies the product ordering problem in sequential purchase contexts where sellers aim to maximize their revenue faced with budget constrained buyers we propose a multi layered decision support framework that combines empirical data with simulation optimization and econometric methods to address this problem our framework allows sellers to i compare revenue performances of limited information sequencing strategies ii quantify benchmark revenue levels that can be achieved via the optimal sequence based on detailed buyer information iii determine the costs of limited information and strategic buyers to the seller and iv identify the moderators of sequencing strategy performance we illustrate our framework through two applications in a business to business used car auction setting contrary to previous studies reporting practitioners tendency to sequence items from the lowest value to the highest our results suggest that the best performing limited information sequencing strategy depends on buyers bidding behavior we also find that the revenue difference between the optimal sequence and a limited information sequencing strategy can be substantial our results show that a significant portion of this revenue difference is associated with the seller s limited information on buyers budgets and product valuations our applications also provide various sensitivity analyses and develop new propositions on the moderators of the relationship between the seller s revenue and sequencing strategies

nonstandard bidder behavior in real world auctions empirical work on auctions has found that bidders deviate from standard behavior in important ways we investigate a range of these behaviors including nonrational herding auction fever quasi endowment effect and escalation of commitment our innovations are to more completely control for unobservables by using new data from a field experiment on ebay and by accounting for censoring of bids below the starting price consistent with standard auction theory and in contrast to the predictions of the nonstandard behaviors we find that auction starting price has no effect on bidder willingness to pay in a private values setting we conclude that there is little evidence that these nonstandard behaviors are important in the field

sequential auctions of heterogeneous objects abstract we consider sequential second price auctions in which heterogeneous objects are sold to bidders with unit demand and a single dimensional type we show that a symmetric increasing equilibrium exists if objects are ordered in terms of dispersiveness of value distributions equilibrium price declines when objects are equivalent on average and additional conditions hold

catalogue vs order of sale effects in sequential auctions theory and evidence from a rare book sale we examine bidding in a rare book sequential auction that has features of a natural experiment lots were arranged in alphabetical order the reserve set non strategically and half the bids placed by mail in bidders we distinguish between the effects induced by the print order of the catalogue from those by the sequential nature of the sale we document the existence of distinct catalogue effects on prices number of bids and price variability and determine their causes we demonstrate that these catalogue effects also influence floor bidder behaviour we derive a theoretical model that generates key aspects of floor bidder behaviour copyright 2004 royal economic society

the bidder s curse traditional explanations for the popularity of auctions are efficiency and revenue maximization we argue that another reason is the potential for overbidding i e buyers bidding above their willingness to pay outside the auction the auction mechanism ensures that even if only few buyers overbid they affect prices and allocations we employ a novel approach to identify overbidding in the field comparing auction prices to simultaneous fixed prices for identical items on the same ebay webpage we argue that fixed prices provide an upper bound for auction bids in a detailed data set of board game auctions we find that the final price exceeds the simultaneous fixed price in 42 percent of the auctions the result is not explained by differences in item quality shipping costs or seller reputation prior auction experience does not eliminate overbidding the finding replicates in a second broad data set of a cross section of auctions 48 percent overbidding the substantial fraction of overbid auctions is induced by a small number of bidders only 17 percent ever bid above the fixed price using a simple model of second price auctions with alternative fixed prices we show that transaction costs of switching between auctions and fixed prices cannot explain the results given that even the expected auction price is higher than the fixed price consistent with limited attention the closer the fixed price is listed relative to an auction the less likely are overbids this effect is strongest for bidders first bids when they are likely to examine the auction and fixed price listings more closely

sequential auctions with randomly arriving buyers we analyze a dynamic market in which buyers compete in a sequence of private value auctions for differentiated goods new buyers and new objects may arrive at random times since objects are imperfect substitutes buyers values are not persistent instead each buyer s private value for a new object is a new independent draw from the same in this paper we consider a model of dynamic markets in which buyers and sellers arrive randomly to the market and examine the equilibrium behavior of market participants in response to these arrivals in particular we investigate the role of current and anticipated future market conditions in determining endogenous outside options in this setting we characterize the influence of these outside options on equilibrium price determination and study the manner in which equilibrium payoffs and behavior are affected by both current conditions and future dynamics in our model buyers face an infinite sequence of auctions for heterogeneous but stochastically equivalent objects each buyer s private value for a new object is a new independent draw from a fixed distribution that arrive at random times moreover new buyers probabilistically arrive on the market in each period thus in any given auction buyers are presented with the outside option of participating in a future auction for an imperfectly substituted equivalent object but with a potentially different number of competitors we describe the unique symmetric markov equilibrium of this model by deriving a precise characterization of this option value

how auctions work for wine and art interview auctioneers and even to buy a little wine in the meantime i have also had the opportunity with john abowd 1988 to observe and collect data on the auction sale of impressionist and contemporary paintings this paper reports on some of the empirical regularities that i and others have observed in the actual operation of the auction markets for these items in view of the rich and diverse array of theoretical literature on auctions it seems high time economists began to spell out precisely what facts it is meant to explain 2

retailers and consumers in sequential auctions of collectibles we analyse an independent private value model where heterogeneous bidders compete for objects sold in sequential second price auctions in this heterogeneous game bidders may have differently distributed valuations and some have multi unit demand with decreasing marginal values retailers others have a specific single unit demand consumers by examining equilibrium bidding strategies and price sequences we show that the presence of consumers leads to more aggressive bidding from the retailers on average and heterogeneous bidders is a plausible explanation of the price decline effect the study of the expected revenue of the seller confirms the interest of auctioneers in inviting different types of bidders nous analysons un modele a valeurs privees independantes dans lequel des encherisseurs heterogenes sont en concurrence pour des objets vendus lors d encheres sequentielles au second prix dans ce jeu heterogene les encherisseurs tirent leurs evaluations de distributions qui peuvent differer et certains les revendeurs ont des demandes multi unitaires avec des evaluations marginales decroissantes alors que les autres les consommateurs ont une demande individuelle specifique l examen des strategies d equilibre et des sequences de prix montrent que la presence de consommateurs conduit en moyenne a des encheres plus agressives de la part des revendeurs et que la presence d encherisseurs heterogenes constitue une explication plausible a la decroissance des prix l etude de l esperance du revenu du vendeur confirme l interet des commissaires priseurs a inviter differentes categories d acheteurs

the efficiency of search under competition and monopsony this paper compares monopsonistic and competitive search equilibria while the competitive equilibrium is efficient the monopsonistic equilibrium is not there is too much search and the employment rate is too low

persistent wage dispersion and involuntary unemployment it is costly for firms offers to workers to be turned down both because firms must make additional offers and making offers is costly and because capital is underused or unused provided that workers apply to at least two firms for jobs there will be wage dispersion in equilibrium and some workers will randomly fail to receive any wage offers firms in the same industry with access to the same technology may nevertheless choose different levels of capital intensity firms using capital intensive technologies will pay higher wages

the convergence of profits in the long run inter firm and inter industry comparisons this paper considers the extent to which the short run dynamic behavior and long run equilibrium levels of profitability differ among firms within the same industry movements in profits are modeled in terms of firm specific deviations from average industry profits and industry specific deviations from economy wide average returns applied to a sample of 217 large u k firms 1951 77 the results suggest that considerable heterogeneities exist within most industries that is most firms profitability experience differs considerably from those of their closest rivals copyright 1987 by blackwell publishing ltd

economies of scale and the volume of intra industry trade abstract using a model of monopolistic competition with traded and non traded goods this paper establishes a positive link between scale economies the volume of intra industry trade and the share of trade in total production these results are consistent with empirical findings

absentee bidders and the declining price anomaly in wine auctions the anomaly is concerned with the observation that in multiple item auctions of identical objects prices tend to decline over time i show that in the case of wine auctions which have been analyzed frequently the anomaly is likely to be caused by the fact that most bids are entered by absentees who use nonoptimal bidding strategies therefore wine auctions can hardly be used to illustrate the standard multiple object auction model

between search and walras we present a model in which unemployed workers simultaneously sample n potential employers by varying n we nest search and walrasian type models of the labor market we show that low values of n yield typical search equilibria the wages are dispersed below the marginal productivity of labor interestingly as n exceeds a relatively small threshold the walrasian type equilibrium emerges with the competitive wage quoted by all firms for intermediate values of n the equilibrium is a hybrid of the walrasian and search equilibria the model generates wage rigidity and yields novel predictions regarding the comovement of wages firm turnover and unemployment

scale economies and the dynamics of recurring auctions we analyze the dynamics of a game of sequential bidding in the presence of stochastic scale effects either economies or diseconomies of scale we show that economies of scale give rise to declining expected equilibrium prices whereas the converse is not generally true moreover first and second price auctions are not always revenue equivalent economies of scale make second price auctions more profitable for the seller whereas revenue equivalence may be preserved in the case of diseconomies

out of equilibrium bids in first price auctions wrong expectations or wrong bids deviations from risk neutral equilibrium bids in auctions can be related to inconsistent expectations with correct best replies or correct expectations but deviant best replies e g because of risk aversion regret quantal response mistakes to distinguish between these two explanations we use a novel experimental procedure and study expectations together with best replies in symmetric and asymmetric auctions we extensively test the internal validity of this setup we find that deviations from equilibrium bids do not seem to be because of to wrong expectations but because of deviations from a risk neutral best reply

auctions and the price of art the value of most important works of art is established by public auction either directly by an actual sale or indirectly by reference to other sales how the auction system works is thus a critical determinant of how the public s preferences are translated into the evaluation of artistic work the auction system is central in the determination of the incentives for artistic work and the efficiency of the auction system is a key determinant of the cost of creating and distributing works of art this paper contains a review of the burgeoning new research of the last decade that has been designed to shed light on how the art auction system actually works what it indicates about price formation and how well it performs we begin our discussion in section 2 with a short description of the mechanics of the auction system and then organize the remainder of our discussion around two major topics the first topic concerns how auction prices can be used to determine and compare overall price movements within the art market and other markets and the second topic concerns how the auction mechanism influences prices we

are art auction estimates biased this article considers whether presale auction estimates are unbiased predictors of price when no sales are considered utilizing a newly constructed sample of over 500 works by eight early twentieth century american artists unbiased presale auction estimates in predicting price while expected are generally not supported in previous work but these studies excepting one do not include no sales in the calculations in order to study the question we employ a standard approach that uses an inverse mills ratio arising from a sample selection probit to correct for selection bias we find that controlling for selection bias presale auction estimates appear to be biased downward and we offer possible reasons for this result

vested interest and biased price estimates evidence from an auction market this study employs a new data set from art auctions to examine the relationship between auctioneer presale price estimates and the long term performance of artworks we find that the price estimates for expensive paintings have a consistent upward bias over a long period of 30 years high estimates at the time of purchase are associated with adverse subsequent abnormal returns moreover the estimation error for individual paintings tends to persist over time these results are consistent with the view that auction house price estimates are affected by agency problems and that

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

private value components and the winner s curse in an art index abstract does the private value component of art induce buyers to overpay for paintings we model this as a type of winner s curse private values imply that prices depend upon the potential number of bidders a number which declines immediately following a sale a modified repeat sales regression allows for both temporal and private value returns to painting investments the temporal component represents the evolving capital appreciation of a painting through time the private value component originates from changes in the maximum private valuation through time preliminary results of this return decomposition indicate that the private value return may be significant and positive the paper explores the further implications of a private value return including its possible biassing effect upon the capital appreciation index resulting from the repeat sales regression

learning to bid in sequential dutch auctions abstract we propose an agent based computational model to investigate sequential dutch auctions with particular emphasis on markets for perishable goods and we take as an example wholesale fish markets buyers in these markets sell the fish they purchase on a retail market the paper provides an original model of boundedly rational behavior for wholesale buyers behavior incorporating learning to improve profits conjectures as to the bids that will be made and fictitious learning we analyze the dynamics of the aggregate price under different market conditions in order to explain the emergence of market price patterns such as the well known declining price paradox and the empirically observed fact that the very last transactions in the day may be at a higher price the proposed behavioral model provides alternative explanations for market price dynamics to those which depend on standard hypotheses such as diminishing marginal profits furthermore agents learn the option value of having the possibility of bidding in later rounds when confronted with random buyers such as occasional participants or new entrants they learn to bid in the optimal way without being conscious of the strategies of the other buyers when faced with other buyers who are also learning their behavior still displays some of the characteristics learned in the simpler case even though the problem is not analytically tractable

anchoring effects evidence from art auctions in order to separate anchoring where an irrelevant message has an effect on the outcome from rational learning where past prices are not irrelevant because they may be used to estimate unobservable quality we use the following strategy we first develop a hedonic prediction of price for both the current sale e g the 2006 sale and the previous sale these hedonic predic tions are based on observable characteristics of each painting and an index of overall prices we then regress actual sale price on our hedonic prediction on the difference between the actual price in the previous sale and our hedonic prediction this expression tests for anchoring and on the difference between the actual price in the previous sale and our hedonic prediction of price in the previous sale this expression controls for unobservable characteristics the test for anchor ing is the extent to which the actual price in the previous sale affects the current sale price we can identify anchoring from other effects because the demand for art which is captured by the average overall price index changes over time whereas the unobservable component of qual ity is assumed to remain constant between auctions this allows us to control for unobserved quality characteristics as long as something drastic has not happened between sales such as a painting has been deemed a fake which is a very rare occurrence the assumption of constant quality is a realistic one

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices

bidding in private value auctions with uncertain values abstract auctions are often used to sell idiosyncratic goods difficult for potential bidders to value ex ante laboratory auctions with uncertainty over final values in this experiment resulted in 18 and 27 of bids above the expected value of the item in private value first price and english auctions respectively risk seeking preferences as measured on an individual decision task cannot explain overbidding and the first price auction results suggest that risk aversion may not be a good explanation for bidding behavior observed with certain values several candidate explanations fail to explain overbidding rather it appears to stem from some bidders who are prone to overbidding relative to first price auctions the size and frequency of overbids are significantly larger in english auctions while more english auctions are won by overbidders differences between the formats appear to be driven by the dynamic nature of english auctions which is consistent with popular notions of auction fever

globalization trade and income my purpose in this paper is to address two questions that confront our discipline repeatedly these days first what is a useful classification of the symptoms and the determinants of globalization a phase used in a remarkable variety of contexts to economists globalization is generally thought of as the increasing internationalization of the production distribution and marketing of goods and services the term is used less precisely in the popular literature perhaps best exemplified by kenichi ohmae s book the borderless world and when used loosely it invokes a wide variety of political sociological environmental and economic trends that are the concern of media attention almost daily however one defines globalization it is surely a development that is having a profound impact on the subject of economics as a whole and ought to have on the field of international economics in particular my second purpose is to ask how globalization is affecting our profession s view of theory and empirical work in international economics traditional trade theory was concerned with a set of fairly well defined questions regarding the determinants of trade the pattern of trade and the welfare consequences of various trade policy instruments the last two decades and perhaps the last decade in particular has led to a much wider interpretation of what living in an open economy means the change that is occurring on a wide range of economic social scientific and

trade effects of scale economies evidence from four eu countries abstract this paper investigates the empirical relationship between the magnitude of scale economies and trade scale economies are directly estimated from a non linear translog production function system these estimates are then introduced in an original supply demand export model the application of this model to four eu countries indicates that exports unambiguously rise with the degree of scale economies these results support schmitt and yu s econ lett 74 2001 127 theoretical expectations

balanced matching and labor market equilibrium we analyze equilibrium in a labor market model wherein it takes time for the workers to contact firms workers assumed identical repeatedly sell their labor services all through their work lives choosing their search intensity endogenously identical firms attempt to maximize their steady state profit flow we focus on the importance and consequences of balanced matching in which workers are more likely to contact a larger firm a unique equilibrium is shown to exist wherein all firms offer the same wage and select an employment level at which wage equals marginal product the effect of traditional labor market policies and empirical implications are discussed

why has trade grown faster than income trade of the oecd countries has grown faster than income during the postwar period this paper tests a number of different hypotheses for the observed growth in the trade income ratio for small open economies increases in real output and international reserves as well as declines in tariff rates are associated with growth in the ratio there are important differences in the behavior of the trade ratio across time and country size

homogeneous profit tax effects for heterogeneous firms in most countries profit taxation is probably much more relevant nowadays than trade liberalisation when it comes to firm level decisions about investment empirically firms are quite heterogeneous with regard to fixed costs the composition of assets tangible versus intangible machinery versus buildings etc and the financing of investments then even uniform changes in profit tax instruments cause heterogeneous responses of firm level effective tax rates and hence after tax profits we argue that with similar profit margins firms would then require pre tax profits to differ as well governments change statutory profit tax rates and by virtue of firms heterogeneity they cause stark selection effects which are mainly related to heterogeneous fixed rather than variable costs we compute costs of capital for a large sample of firms to illustrate how homogeneous changes in tax instruments hit firms differently using bureau van dijk s orbis database we illustrate that the effects of changes in statutory instruments have relatively large systematic variance components across industries within countries and also relatively large ones of firms within industries and countries

sequencing strategies in large competitive ascending price automobile auctions an experimental examination this paper reports on a large scale field experiment testing strategies available to a seller participating in simultaneous competitive sequential ascending price automobile auctions every other week the seller offered approximately 120 vehicles for sale in an auction environment in which several competitive sellers offered on the order of 3 000 vehicles the experiment tested various sequences in which the seller could offer the vehicles such as high values first or low values first surprisingly and contrary to intuition drawn from the theory of single item and single seller auctions the worst performing sequence from those tested is for the seller to order vehicles from highest to lowest values the best sequence is to group the vehicles by type and offer the low valued vehicles first and then move to offer the higher valued vehicles our conjecture is that this sequence reduces the competition with other sellers for the attention of specialized buyers

erratumauction guarantees for works of art this paper addresses the question of whether auction guarantees change the bidding environment and whether they cause a change in price once the value of an item is taken into account we analyze both the cases of third party guarantees and in house guarantees we use two datasets one of christie s and sotheby s contemporary and impressionist evening sales from january 2010 to february 2012 and another larger dataset consisting of all items auctioned at christie s from 2001 to may 2011 while more expensive items are more likely to have guarantees we find little empirical evidence to suggest an effect on price from the guarantee itself once the value of the item is taken into account

bidding behavior and experience in internet auctions abstract we study the role of experience in internet art auctions by analyzing repeated bidding by the same bidder in a unique longitudinal field dataset our results show that experience significantly lowers the level of bids suggesting that bidders change their bidding behavior throughout time participating in more than ten auctions brings down average bids by up to 26 we further test several possible explanations for the observed learning behavior and show that the change in bidding strategy is a result of a change in within auction behavior that is generated with experience our results are robust to concerns of endogenous participation as well as bidder fixed effects

ordering revenue and anchoring in art auctions we estimate the effect of ordering by value on revenues in sequential art auctions held by sotheby s and christie s we exploit a pre determined rotation of which of these two houses holds their auction first during auction week in new york city when the house that goes first has relatively expensive paintings compared to the other house we find that the sale premium for the week is around 21 higher relative to the mean sale premium and the fraction of paintings sold during the week is around 11 higher we provide evidence that this is due to an anchoring effect

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

how not to run auctions the european 3g telecom auctions abstract there were enormous differences in the revenues from the european third generation 3g or umts mobile phone license auctions from 20 euros per capita in switzerland to 650 euros per capita in the uk though the values of the licenses sold were similar poor auction designs in some countries facilitated collusion between firms and failed to attract entrants the sequencing of the auctions was also crucial we discuss the auctions in the uk netherlands germany italy austria switzerland belgium greece and denmark

the declining price anomaly in dutch dutch rose auctions in symmetric independent private value auctions of a single object with risk neutral bidders the english second price auction has strategic simplicity it is optimal for bidders to reveal their valuation of the object and make bids accordingly in that case the auction is won by the person with the highest valuation who pays a price equal to the second highest valuation in a dutch first price auction this simplicity vanishes here winning bidders have to pay their bid to make a profit they shade their bids and bid below their valuation of the object somewhat loosely one may state that an english auction is truth revealing whereas a dutch auction requires strategic behavior the simple structure of the one unit english auction vanishes if two identical objects are auctioned sequentially now in the first round it is optimal for bidders to shade their bids to account for the option value of participating in the subsequent second round robert j weber 1983 bidders with a higher valuation also have a higher option value therefore they shade their bids in the first round by a greater amount than do bidders with a lower valuation as the auction proceeds the number of bidders decreases over the sequence of auctions the number of objects decreases as well the first fact has a negative effect on the competition for an object and the second has a positive effect both effects cancel out and prices follow a martingale as a result all gains to waiting are arbitraged away and the expected prices in both rounds are the same the latter result also holds for sequential auctions of more than two objects and does not depend on whether the auction is english or dutch this neat theoretical result is not supported by empirical research which usually finds price declines orley ashenfelter 1989 found a mild price decrease in sequential auctions of identical units of wine mcafee and daniel vincent 1993 also present empirical evidence on sequential wine auctions they found that on average the second unit of wine was sold at a price 1 4 percent lower than the price of the first unit victor ginsburgh 1998 uses data from wine auctions in which the auctioneer acted as an agent for bidders who were not present at the auction he found price declines but apparently the absent bidders entered bids that did not fit with the theory empirical studies by ashenfelter and david genesove 1992 see also jean jacques laffont 1997 and alan beggs and kathryn graddy 1997 concern heterogeneous objects they also detected price declines because of the contradiction between theory and empirical studies the declining price phenomenon is regarded to be an anomaly

the dynamics of company profits an international comparison 1 profits and the process of competition dennis c mueller 2 modelling persistent profitability paul a geroski 3 the persistence of profits in the united states dennis c mueller 4 the persistence of profits in us manufacturing industries ioannis kessides 5 the persistence of profitability in canada r shyam khemani and d m shapiro 6 persistence of corporate profits in the federal republic of germany joachim schwalbach and talat mahmood 7 the persistence of profits in france frederic jenny and andre paul weber 8 the persistence of profits in japan hiroyuki odagiri and hideki yamawaki 9 the persistence of profits in the uk john cubbin and paul a geroski 10 the persistence of profits international comparison hiroyuki odagiri and hideki yamawaki 11 the persistence of profits in perspective paul a geroski and dennis c mueller

collusive practices in repeated english auctions experimental evidence on bidding rings the repeated meeting of buyers at english auctions where multiple units are sold is a common occurrence the art auctions at sotheby s christie s and other prestigious auction houses are attended by a regular group of institutional buyers more mundanely the same taxicab buyers meet at vehicle auctions for used police cars jon p nelson 1995 commission order buyers attend the same livestock and agricultural commodity auctions these buyers may be agents for multiple meat processors u s department of agriculture grain inspection packers and stockyards administration 2001 the 1946 american tobacco antitrust case american tobacco co et al v united states 328 u s 781 1946 is a well known account of how buyers of tobacco operated to hold down the price of auctioned leaf tobacco at various sites buyers for the big three cigarette manufacturers had developed facilitating practices that helped them purchase raw tobacco at relatively low prices these buyers voluntarily restricted themselves to attend the same auctions buyers were aware of the amount of leaf and the tobacco grades available at auction sites they had instructions from the cigarette makers on the highest bid prices they could pay and communication among these buyers seemed evident from a coordinated practice of buying low grade tobacco that was not used by the makers in the sale of livestock cattle producers have claimed that packer buyers act to hold down cattle prices at the auction site there are a few large processors who give their agents buy orders these orders along with further communication between the processor and agent instruct the agent on the number of cattle to purchase during a given week and provide a schedule of prices they can pay for varying types of cattle some agents represent more than one processor or packer and therefore have multiple buy orders agents repeatedly meet each other at regional cattle auctions they may not be the only buyers but they are the largest purchasers of slaughter cattle brought to market and at most auction sites have substantial monopsony power this paper documents the impacts of several practices that may facilitate low sale prices when multiple units are sold at repeated english auctions laboratory english auction markets are created the number of symmetric buyers attending the auction is either six or two with total demand in these two environments held constant the six buyer market is intended to represent a relatively competitive environment while auctions with two buyers represent rivalry with substantial monopsony power held by each agent we use these two market environments to study how selected treatments or facilitating influences affect the behavior of buying agents the six buyer market generally is viewed as a control for comparison to the dominant twobuyer environment but very collusive behavior may be observed in the six buyer auctions depending upon market practices phillips department of economics and finance university of wyoming p o box 3985 laramie wy 82071 e mail owenphil uwyo edu menkhaus department of agricultural and applied economics university of wyoming p o box 3354 laramie wy 82071 e mail menkhaus uwyo edu coatney u s department of agriculture grain inspection packers and stockyards administration competition branch aurora co 80011 e mail kalyn t coatney usda gov this work has been supported by the u s department of agriculture under grant numbers usdagipsnc5418 and usdag00354009126 the findings and conclusions expressed in this paper are those of the authors and do not necessarily reflect the views of the funding agency 1 these are regional auctions houses where slaughter cattle primarily cull cows and fed steers and heifers and feeder cattle are sold cull cows are animals taken out of a herd and slaughtered because of age inability to produce calves or reduced milk production concerns regarding slaughter cow possessors sharing common purchasing agents have been raised in assessment of the cattle and hog industries calendar year 2000 u s department of agriculture grain inspection packers and stockyards administration june 2001

the collateral value of fine art in this paper we examine the effect of implicit seller reserves on the estimation of value at risk based on historical asset sales data we direct our examination toward how and whether fine art might prove an appropriate form of loan collateral for banks and other financial institutions using a data set of french impressionist paintings brought to auction from 1985 to 2001 we control for the effect of works that are bought in house to construct a distribution of potential sale values that corrects for sample selection bias it turns out that the downside risk surrounding deviations of auction prices from expert presale estimates depends critically on how buy ins are incorporated if downside risk is assessed solely on historical experience with successful auction sales the data appear to support loan to value ratios between 50 and a 100 larger than loan to value ratios that countenance the existence of seller reserves the auction process however is quantifiable and can reveal the necessary risk information required for loan consideration

no help wanted signs and the duration of job search in standard job search models the increased duration ofjob search in recessions is the result of workers failure to perceive the downward shift of the wage offer distribution they face an alternative explanation offered by okun i98i argues that the increase in no help wanted signs i e zero wage offers in recessions raises workers optimal duration of search since the increased duration of job search is explained without reference to faulty wage expectations unemployment does not automatically return to the natural rate as workers recognise the new wage offer distribution the effect of an increase in no help wanted signs a reduction in the probability of receiving a nonzero wage offer on the duration of search in sequential job search models is ambiguous in general barron i 975 this paper seeks to discover conditions under which such an increase raises the optimal duration of job search for this purpose a simple job search model with no help wanted signs is developed in the next section 2 section ii shows that if the distribution of wage offers is log concave the optimal duration of job search rises with increases in no help wanted signs other circumstances that yield this result are also examined the final section contains concluding remarks