public trust the law and financial investment abstract how does trust evolve in markets what is the optimal level of regulation and how does this affect trust formation and economic growth in a theoretical model we analyze these questions given the value of social capital and the potential for growth in the market when social capital is valuable regulation and trustfulness are substitutes in this case regulation may cause lower aggregate investment and decreased economic growth when the social capital is less valuable regulation and trustfulness may be complements in the paper we analyze the optimal level of regulation and highlight the novel predictions of the model

two models of bid taker cheating in vickrey auctions vickrey second price sealed bid auctions have attractive theoretical properties but standard first price sealed bidding is far more common explanations of the rarity of vickrey auctions rely on concern about revelation of private information and on fear of cheating the authors present two models of bid taker cheating a static game theoretic model and a reputation based model of repeated auctions in the first an honest bid taker will not choose a vickrey auction in the second a trusted bid taker who cheats when it pays eventually destroys his or her reputation and the trust on which the use of vickrey auctions depends copyright 1995 by university of chicago press

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

sequential auctions with informational externalities and aversion to price risk decreasing and increasing price sequences a large body of empirical research has shown that prices of identical goods sold sequentially sometimes increase and often decline across rounds this article introduces a tractable form of risk aversion called aversion to price risk and shows that declining prices arise naturally when bidders are averse to price risk when there are informational externalities there is a countervailing effect which pushes prices to raise along the path of a sequential auction even if bidder s signals are independent the article shows how to decompose the effect of aversion to price risk from the effect of informational externalities

well being social capital and public policy what s new this article summarises recent empirical research on the determinants of subjective well being results from national and international samples suggest that measures of social capital including especially the corollary measures of specific and general trust have substantial effects on well being beyond those flowing through economic channels cross national samples supported by parallel analysis of suicide data show large well being effects from the quality of government finally using well being data to estimate the income equivalents non financial aspects of the workplace produces numbers so large as to suggest the existence of unexploited opportunities to improve both employee satisfaction and enterprise efficiency

educational benefits and military service an analysis of enlistment reenlistment and veterans benefit usage 1991 2005 i introduction educational benefits for military veterans have become a prime recruiting tool in the all volunteer military force avf the primary education benefit for most of the avf era has been the montgomery gi bill mgib this version of the gi bill began in july 1985 and bears the name of its sponsor alabama representative sonny montgomery under this program eligible veterans who enroll in an education program approved by the veterans administration are eligible to receive up to 36 mo of benefits if they begin usage within 10 yr of separating from service veterans are only eligible for mgib benefits if they contribute 100 per month during their first year of service 1 from time to time three of the four military branches have supplemented the basic mgib benefit with college fund cf benefits research has indicated that educational benefits do in fact attract enlistments of high quality youth defined by the military services to be youth who possess a high school degree and who score above the youth population average of 50 on the armed forces qualification test afqt 2 although educational benefits attract more highly qualified youth into the military those benefits may be costly for at least two reasons first such youth may be more likely to separate from the military to use their benefits thus requiring higher rates of recruitment of new enlistees to maintain the size and quality of the force second higher benefits may increase the tendency of youth who separate from the military to use those benefits as well as increase the duration of usage of course this would not be surprising a growing body of research finds that college tuition subsidies raise college attendance interest in the potential behavioral effects of military educational benefits was recently heightened by a vigorous debate in congress over veterans benefits this debate culminated in the post 9 11 veterans education assistance act of 2008 which was passed in july 2008 becoming effective on august 1 2009 the act provides future veterans with substantially higher educational benefits than those available through the mgib this paper analyzes how gi bill benefits affect military retention and veterans benefit usage the analysis is useful for two reasons first as our review of the literature below indicates existing studies of the retention and usage effects of military education benefits are now quite dated second prior studies have all ignored issues relating to selection as a result the estimates of retention and usage effects found in them cannot be cleanly interpreted as pure incentive effects arising from benefit changes our analysis accounts for the possibility that higher veterans education benefits may attract youth who are more likely to separate and use those benefits conditional on their observables over the period of our analysis the nominal value of gi bill benefits were set legislatively and changed unpredictably we use the unpredictable evolution of the value of veterans education benefits over our data period to disentangle selection effects and incentive effects of benefit changes on retention and benefit usage our analysis makes use of administrative data that span the period 1988 2005 and contains annual information on every individual who entered active military service from the time of entry to the time of separation or if still in service until the end of fiscal year fy 2004 as shown below this was a period during which the real value of military educational benefits fluctuated considerably for those who separated details of educational benefit usage were available to us as of june 2005 if educational benefits do affect the retention behavior of military personnel or the educational decisions of military veterans their effects should be apparent in data over this period to highlight our key findings we estimate that a 10 000 increase in mgib benefits would increase the fraction of army veterans who use them within 2 yr of separation by 5 8 percentage points

auctions for social lending a theoretical analysis prosper today the second largest social lending marketplace with nearly 1 5 million members and 380 million in funded loans employed an auction mechanism amongst lenders to nance each borrower s loan until 2010 given that a basic premise of social lending is cheap loans for borrowers how does the prosper auction do in terms of the borrower s payment when lenders are strategic agents with private true interest rates we rst analyze the prosper auction as a game of complete information and fully characterize its nash equilibria and show that the uniform price prosper mechanism while simple can lead to much larger payments for the borrower than the vcg mechanism we next compare the prosper mechanism against the borrower optimal auction in an incomplete information setting and conclude by examining the prosper mechanism when modeled as a dynamic auction and provide tight bounds on the price for a general class of bidding strategies

natural disasters and university enrolment evidence from l aquila earthquake although there are several studies looking at the effect of natural disasters on economic growth less attention has been dedicated to their impact on educational outcomes especially in more developed countries we use the synthetic control method to examine how the l aquila earthquake affected subsequent enrolment at the local university this issue has wide economic implications as the university of l aquila made a large contribution to the local economy before the earthquake our results indicate that the earthquake had no statistically significant effect on first year enrolment at the university of l aquila in the three academic years after the disaster this natural disaster however caused a compositional change in the first year student population with a substantial increase in the number of students aged 21 or above this is likely to have been driven by post disaster measures adopted in order to mitigate the expected negative effects on enrolment triggered by the earthquake

revealed preference and activity rules in dynamic auctions activity rules constraints that limit bidding in future rounds based on past bids are intended to limit strategic bidding delays in high stakes auctions this article provides a general treatment of activity rules traditional point based rules are effective for homogeneous goods and reasonably suited for substitute goods however they are simultaneously too strong and too weak for general environments they allow parking while sometimes preventing straightforward bidding we prove that the activity rule operationalizing the generalized axiom of revealed preference garp is essentially the unique rule that enforces the law of demand while enabling straightforward bidding and never producing dead ends

policy watch medicare public policies are often made without much recourse to economic reasoning economists are sometimes unaware of what is happening in the world of public affairs as a result both the quality of public decision making and the role that economists play in it are less than optimal this feature contains short articles on topics that are currently on the agendas of policymakers thus illustrating the role of economic analysis in illuminating current debates suggestions for future columns and comments on past ones should be sent to daniel weinberg c o journal of economic perspectives hhes division bureau of the census department of commerce washington d c 20233

hierarchical package bidding a paper pencil combinatorial auction we introduce a new combinatorial auction format based on a simple trans parent pricing mechanism tailored for the hierarchical package structure proposed by rothkopf pekec and harstad 1998 to avoid computational complexity this combination provides the feedback necessary for bidders in multi round auctions to discern winning bidding strategies for subsequent rounds and to coordinate re sponses to aggressive package bids the resulting mechanism is compared to two leading alternatives in a series of laboratory experiments involving varying degrees of value synergies based on these wind tunnel tests the fcc has decided to use hierarchical package bidding in the major upcoming 700mhz auction

does social trust determine the size of the welfare state evidence using historical identification most modern welfare states offer an extensive array of services and benefits that are wholly or partly financed by tax revenue one missing link in explaining the long run sustainability of such comprehensive welfare states could be the already existing stock of trust indeed our cross country results suggest that trust determines the size of welfare states as well as three features that are arguably necessary for their preservation high levels of political confidence strong legal institutions protecting private property rights and low levels of bureaucratic corruption

the declining price anomaly abstract data from wine auctions indicate that identical products sold sequentially typically follow a decreasing pattern of prices known as the declining price anomaly this is explained for both first and second price auctions by appealing to risk averse bidders earlier bids are then equal to expected later prices plus a risk premium associated with the risky future price we show that this logic rests on the assumption of nondecreasing absolute risk aversion which is necessary for pure strategy equilibrium bidding functions to exist thus decreasing absolute risk aversion implies ex post inefficiency with positive probability data from wine auctions are used to confirm the existence of the declining price anomaly journal of economic literature classification numbers d43 d44 d81 d82 l81

determining the optimal length of regulatory guarantee a length of contract auction we present an auction design to be used in the area of procurement that allows the length of the regulatory funding period to be determined via an auction it allows bidders to submit bids against a payment for periods of varying lengths say 25 and 30 years instead of a fixed 20 year contract this can be desirable for securing more favourable terms in financial markets it yields efficiency and delivers the optimal length of contract defined as where social value is maximised the auction is applicable to any infrastructure investment such as energy transportation or any area that uses contracts

properties of the combinatorial clock auction the combinatorial clock auction has become popular for large scale spectrum awards and other uses replacing more traditional ascending or clock auctions we describe some surprising properties of the auction including a wide range of ex post equilibria with demand expansion demand reduction and predation our results obtain in a standard homogeneous good setting where bidders have well behaved linear demand curves and suggest some practical difficulties with dynamic implementations of the vickrey auction

compact bid languages and core pricing in large multi item auctions we introduce an auction design framework for large markets with hundreds of items and complex bidder preferences such markets typically lead to computationally hard allocation problems our new framework consists of compact bid languages for sealed bid auctions and methods to compute second price rules such as the vickrey clarke groves or bidder optimal core selecting payment rules when the optimality of the allocation problem cannot be guaranteed to demonstrate the efficacy of the approach for a specific complex market we introduce a compact bidding language for tv advertising markets and investigate the resulting winner determination problem and the computation of core payments for realistic instances of the respective winner determination problems very good solutions with a small integrality gap can be found quickly although closing the integrality gap to find marginally better solutions or prove optimality can take a prohibitively large amount of time our subsequent adaptation of a constraint

an efficient dynamic auction for heterogeneous commodities this paper proposes a new dynamic design for auctioning multiple heterogeneous commodities generalizing earlier work that treated identical objects an auctioneer wishes to allocate one or more units of each of k heterogeneous commodities to n bidders the auctioneer announces a vector of current prices bidders report back quantities demanded at these prices and the auctioneer adjusts the prices units are credited to bidders at the current prices as their opponents demands decline and the process continues until every commodity market clears bidders rather than being required to behave as price takers are permitted to strategically exercise their market power nevertheless with pure private values the proposed auction yields walrasian equilibrium prices an efficient outcome results as from a vickrey clarke groves mechanism but bidders are only required to evaluate their demands along a one dimensional path of prices rather than reporting their utilities over the entire k dimensional consumption set the auction is also more transparent and potentially simpler for bidders to understand and has the advantage of assuring the privacy of the upper portions of bidders demands theoretically the new auction provides a new foundation for convergence to walrasian equilibrium in an exchange economy practically it provides an efficient method for simultaneously auctioning two or more related types of securities for example three month and six month treasury bills it is also potentially useful for auctioning multiple types of communications spectrum for example licenses for paired and unpaired spectrum

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

ascending prices and package bidding further experimental analysis abstract we explore the performance of multi round price guided combinatorial auctions for a previously untested class of value profiles in which synergies arise from shared fixed costs we find that in many cases a simulator that bids straightforwardly does well in predicting auction performance but exceptions arise because human bidders sometimes rely on cues besides prices to guide their package selection and because they sometimes bid aggressively on items for which they have no value in order to increase payments by bidders seeking complementary packages in our experiments this latter behavior not only raises prices but can also improve efficiency by mitigating the threshold problem comparisons between a combinatorial clock auction cca and a simultaneous ascending auction saa are reported

fair payments for efficient allocations in public sector combinatorial auctions motivated by the increasing use of auctions by government agencies we consider the problem of fairly pricing public goods in a combinatorial auction a well known problem with the incentive compatible vickrey clarke groves vcg auction mechanism is that the resulting prices may not be in the core loosely speaking this means the payments of the winners could be so low that there are bidders who would have been willing to pay more than the payments of the winning bidders clearly this unfair outcome is unacceptable for a public sector auction recent advances in auction theory suggest that combinatorial auctions resulting in efficient outcomes and bidder pareto optimal core payments offer a viable practical alternative to address this problem this paper confronts two critical issues facing the bidder pareto optimal core payment first motivated to minimize a bidder s ability to benefit through strategic manipulation through collusive agreement or unilateral action we demonstrate the strength of a mechanism that minimizes total payments among all such auction outcomes narrowing the previously broad solution concept second we address the computational difficulties of achieving these outcomes with a constraint generation approach promising to broaden the range of applications for which bidder pareto optimal core pricing achieves a comfortably rapid solution

non bidding equilibrium in an ascending core selecting auction abstract this paper investigates the perfect bayesian equilibrium in an ascending price core selecting auction which is recently used in some countries spectrum license auctions we suppose that there are two identical items two small bidders and one large bidder the small bidders demand only one unit of the item whereas the large bidder wants both units package bidding ensures that the large bidder faces no exposure problem and behaves truthfully however one of the small bidders stops bidding at the beginning in the equilibrium although small bidders generally face the free rider problem and have incentives to underbid once a bidder is the only small one remaining he bids truthfully stopping early induces the remaining bidder to behave truthfully hence each small bidder wants to be the first to stop bidding the free rider problem is considerably mitigated when there are many small bidders

are individualistic societies less equal evidence from the parasite stress theory of values it is widely believed that individualistic societies which emphasize personal freedom award social status for accomplishment and favor minimal government intervention are more prone to higher levels of income inequality compared to more collectivist societies which value conformity loyalty and tradition and favor more interventionist policies the results in this paper however challenge this conventional view drawing on a rich literature in biology and evolutionary psychology we test the provocative parasite stress theory of values which suggests a possible link between the historical prevalence of infectious diseases the cultural dimension of individualism collectivism and differences in income inequality across countries specifically in a two stage least squares analysis we use the historical prevalence of infectious diseases as an instrument for individualistic values which in the next stage predict the level of income inequality measured by the net gini coefficient from the standardized world income inequality database swiid our findings suggest that societies with more individualistic values have significantly lower net income inequality the results are robust even after controlling for a number of confounding factors such as economic development legal origins religion human capital other cultural values economic institutions and geographical controls

the effect of subsidies in kind on the choice of a college abstract it is possible that government subsidies to higher education disbursed in kind can produce the anomalous result of reducing the consumption of the good being subsidized in this paper i employ individual and college data to estimate the effect of such subsidies on students choices of college quality empirical estimates from a switching regression model with correction for the joint decisions to apply to college and choose the public or private sector are presented predictions from the model suggest that students choose a substantially lower quality public college than they would have chosen in the private sector

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

does social distrust always lead to a stronger support for government intervention the paper considers trust as an empirical determinant of individual support for government intervention the central notion is that the influence of generalized trust on policy attitudes is conditional on confidence in both state actors and major companies the starting point is the idea that individuals who generally distrust other persons have a stronger taste for the regulation of economic activities while people with high interpersonal trust are in favor of less stringent regulatory control yet people who do not trust unknown others also tend to mistrust government and private companies if mistrust in state actors dominates we should not necessarily expect stronger interventionist preferences estimating the determinants of interventionist attitudes using data from the world values survey european values study for approximately 130 000 individuals in forty oecd and eu countries we find evidence that the impact of social trust on government intervention attitudes is conditional on institutional trust confidence in major companies appears to have a stronger effect on preference formation than trust in state actors

on ascending vickrey auctions for heterogeneous objects abstract we construct an ascending auction for heterogeneous objects by applying a primal dual algorithm to a linear program that represents the efficient allocation problem for this setting the auction assigns personalized prices to bundles and asks bidders to report their preferred bundles in each round a bidder s prices are increased when he belongs to a minimally undersupplied set of bidders this concept generalizes the notion of overdemanded sets of objects introduced by demange gale and sotomayor for the one to one assignment problem under a submodularity condition the auction implements the vickrey clarke groves outcome we show that this type of condition is somewhat necessary to do so when classifying the ascending auction literature in terms of their underlying algorithms our auction fills a gap in that literature we relate our results to various ascending auctions in the literature

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

quadratic core selecting payment rules for combinatorial auctions we report on the use of a quadratic programming technique in recent and upcoming spectrum auctions in europe specifically we compute a unique point in the core that minimizes the sum of squared deviations from a reference point for example from the vickrey clarke groves payments analyzing the karush kuhn tucker conditions we demonstrate that the resulting payments can be decomposed into a series of economically meaningful and equitable penalties furthermore we discuss the benefits of this combinatorial auction explore the use of alternative reserve pricing approaches in this context and indicate the results of several hundred computational runs using cats data

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

frontiers in spectrum auction design abstract spectrum auction design has seen number innovations in the recent years regulators have used various types of combinatorial auction formats including simple ascending combinatorial clock auctions and first price sealed bid combinatorial auctions the simultaneous multi round auction smra and the two stage combinatorial clock auction cca are the most wide spread auction formats for spectrum sales to date we provide an accessible overview of strategic problems in these auction formats and summarize research challenges in this field for a broader audience of readers in industrial organization

regulation and distrust in a cross section of countries government regulation is strongly negatively correlated with social capital we document this correlation and present a model explaining it in the model distrust creates public demand for regulation while regulation in turn discourages social capital accumulation leading to multiple equilibria a key implication of the model is that individuals in low trust countries want more government intervention even though the government is corrupt we test this and other implications of the model using country and individual level data on social capital and beliefs about government s role as well as on changes in beliefs and in trust during the transition from socialism

tradeable carbon permit auctions how and why to auction not grandfather abstract an auction of carbon permits is the best way to achieve domestic carbon caps designed to limit global climate change to minimize administrative costs permits would be required at the level of oil refineries natural gas pipe lines natural gas liquid sellers and coal processing plants to maximize liquidity in secondary markets permits would be fully tradable and bankable the government would conduct quarterly auctions a standard ascending clock auction in which price is gradually raised until there is no excess demand would provide reliable price discovery an auction is preferred to grandfathering giving companies permits based on historical output or emissions because it allows reduced tax distortions provides more flexibility in distribution of costs provides greater incentives for innovation and reduces the need for politically contentious arguments over the allocation of rents

explaining social policy preferences evidence from the great recession to what extent do personal circumstances as compared to ideological dispositions drive voters preferences on welfare policy addressing this question is difficult because a person s ideological position can be an outcome of material interest rather than an independent source of preferences the article deals with this empirical challenge using an original panel study carried out over four years tracking the labor market experiences and the political attitudes of a national sample of americans before and after the eruption of the financial crisis the analysis shows that the personal experience of economic hardship particularly the loss of a job had a major effect on increasing support for welfare spending this effect was appreciably larger among republicans than among democrats a result that was not simply due to a ceiling effect however the large attitudinal shift was short lived dissipating as individuals employment situations improved the results indicate that the personal experience of an economic shock has a sizable yet overall transient effect on voters social policy preferences

market design and the evolution of the combinatorial clock auction the defining characteristic of the cca is a two stage bidding process the first stage is a dynamic clock auction the auctioneer announces prices for the items in the auction and bidders respond with quantities desired at the announced prices bidding in this stage progresses in multiple rounds as prices increase until aggregate demand is less than or equal to supply for every item in the second stage bidders have the opportunity to submit a multiplicity of supplementary bids both to improve upon their bids from the clock rounds and to express values for other packages

a practical guide to the combinatorial clock auction the combinatorial clock auction cca is an important recent innovation in auction design that has been utilised for many spectrum auctions worldwide while the theoretical foundations of the cca are described in a growing literature many of the practical implementation choices are neglected in this article we examine some of the most critical practical decisions for a regulator implementing the cca topics include implementation of reserve prices endogenous band plans supplementary round activity rules competition policy bidding languages and allocation of the core burden we illustrate our discussion with examples from recent spectrum auctions that used the cca format

combinatorial clock auctions price direction and performance abstract the lack of price guidance towards efficiency relevant packages in ascending combinatorial clock auctions acca can lead to a low efficiency allocation of goods we propose a descending price combinatorial clock auction dcca with a newly devised pricing strategy to improve on this problem using agent based simulations we document that the dcca provides significant improvements over the acca and we are able to understand in which environments these improvements are likely to be the strongest we test these predictions in the laboratory with human subjects and find evidence that the dcca generates improvements in auction efficiency and revenue

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

auction format and auction sequence in multi item multi unit auctions an experimental study we experimentally study the effect of auction format sealed bid versus closed clock versus open clock and auction sequence simultaneous versus sequential on bidding behaviour and auction outcomes in auctions of multiple related multi unit items prominent field applications are the sale of emission permits fishing rights and electricity we find that when auctioning simultaneously clock auctions outperform sealed bid auctions in terms of efficiency and revenues this advantage disappears when the items are auctioned sequentially in addition auctioning sequentially has positive effects on total revenues across all auction formats resulting from fiercer competition on the item auctioned first

the paradox of redistribution and strategies of equality welfare state institutions inequality and poverty in the western countries the structure of welfare state institutions 2 a trade off exists between the degree of low income targeting and the size of redistributive budgets 3 outcomes of market based distribution are often more unequal than those of earnings related social insurance programs we argue that social insurance institutions are of central importance for redistributive outcomes using new data our comparative analyses of the effects of different institutional types of welfare states on poverty and inequality indicate that institutional differences lead to unexpected outcomes and generate the paradox of redistribution the more we target benefits at the poor and the more concerned we are with creating equality via equal public transfers to all the less likely we are to reduce poverty and inequality social scientists and social reformers have long debated how the welfare state and social policies should be designed so as to best reduce poverty and inequality this debate involves two different issues one question concerns whether social policies should be targeted or universal that is should they be organized for the poor only or should the welfare state include all citizens in the context of nontargeted programs another question concerns the level of benefits should benefits be equal for all or should they be related to previous earnings and in

the spirits of capitalism and socialism the world values survey contains an item on ownership which is polled 200 times in 92 countries at the four waves of 1990 1995 2000 and 2005 these polls are developed into the cs score that measures the aggregate mass support for capitalism and socialism four hypotheses are advanced and tested to explain the wide variation in the 200 cs scores it is due to the cross country distribution of income and consequently the west stands out as the most capitalist minded area of the world institutions of the country such as legal quality the left right dimension in politics and cultural differences

trust regulation and market failures abstract government regulation of firms is associated with more negative externalities and unofficial activity across countries i argue that this correlation mainly reflects causality going from concerns about market failures to demand for government intervention using trust in others as a proxy for such concerns i show that differences in trust explain a great deal of variation in entry regulations then controlling for trust in the regression of market failures on regulation the latter is no longer associated with worse economic outcomes the same result is confirmed when i exploit country population as an alternative source of variation in regulation

investigating capitalism aversion capitalism aversion there are two non mutually exclusive theories of individual variations in pro capitalism opinions the first theory views pro capitalism opinions as self serving individuals are opposed to market forces when they threaten their economic rents the second theory views differences in such opinions as reflecting genuine disagreement on the efficiency of various economic systems using individual data we investigate the validity of both theories focusing on attitudes toward private ownership private profit and competition we find evidence that the first theory explains some of the variations in attitudes however consistent with the second theory we also find evidence of individual learning about the comparative virtues of economic systems the learning is slow home biased and path dependent long run cultural and historical determinants of pro market attitudes such as religion and legal origins explain more than 40 of the cross country variations in capitalism aversion last we provide tentative evidence that at the country level pro market opinions affect the nature of economic institutions our results suggest that the feasibility of economic reform does not depend solely on its impact on the distribution of rents ideological a prioris are likely to be important as well

a branch and price algorithm and new test problems for spectrum auctions when combinatorial bidding is permitted in auctions such as the proposed fcc auction 31 the resulting full valuations and winner determination problem can be computationally challenging we present a branch and price algorithm based on a set packing formulation originally proposed by dietrich and forrest 2002 a column generation approach for combinatorial auctions in mathematics of the internet e auction and markets the ima volumes in mathematics and its applications vol 127 springer verlag new york 15 26 this formulation has a variable for every possible combination of winning bids for each bidder our algorithm exploits the structure of the xor of or bidding language used by the fcc we also present a new methodology to produce realistic test problems based on the round by round results of fcc auction 4 we generate 2 639 test problems which involve 99 items and are substantially larger than most of the previously used benchmark problems because there are no real life test problems for combinatorial spectrum auctions with the xor of or language we used these test problems to observe the computational behavior of our algorithm our algorithm can solve all but one test problem within 10 minutes appears to be very robust and for difficult instances compares favorably to the natural formulation solved using a commercial optimization package with default settings although spectrum auctions are used as the guiding example to describe the merits of branch and price for combinatorial auctions our approach applies to auctions of multiple goods in other scenarios similarly

where they go what they do and why it matters the importance of geographic accessibility and social class for decisions relating to higher education institution type degree level and field of study this article considers the impact of geographic accessibility and social class on school leavers when making decisions relating to higher education institution hei type degree level and field of study using a novel and comprehensive irish data set we consider a number of joint decisions facing school leavers in relation to where and what to study and employ a range of bivariate choice models which allows us to control for correlations in these decisions we find that geographic accessibility and social class play an important role in determining outcomes relating to hei type degree level and field of study we argue that these decisions are important in terms of future labour market and other outcomes for school leavers and that current policy in ireland does not go far enough in mitigating the impact of distance and socio economic barriers on these outcomes

shapley value based pricing for auctions and exchanges abstract this paper explores how the shapley value can be used as the basis of a payment rule for auctions and exchanges the standard shapley value is modified so that losing bidders do not make or receive any payments the new rule called the balanced winner contribution bwc rule satisfies a variation of myerson s balanced contribution property the payment rule is fair in the sense that with respect to reported values the members of every pair of traders make equal contributions to each other s share of the gains from trade bwc payments can be used in single item auctions and more complex auctions and exchanges with multiple items and package bidding a series of examples is presented to illustrate how the bwc rule works and how the payments compare to those based on competitive prices the core and the vickrey clarke groves mechanism

changes in college skills and the rise in the college wage premium the college wage premium for new labor market entrants rose sharply during the 1980s we ask how much of this change arose from changes in the skill level of the typical college graduate we find that skills attained prior to college as measured by standardized test scores and high school grades had no effect on the change in the college wage premium for men in contrast the returns to math ability rose considerably for women failing to account for math skills thus substantially overstates the growth in the female college wage premium skills acquired in college as reflected in the distribution of students across majors had important effects on the relative wages of men the trend away from low skill subjects such as education and toward high skill subjects such as engineering accounts for one fourth of the rise in the male college wage premium

the design testing and implementation of virginia s nox allowance auction we report on the design and testing of three auction mechanisms to maximize revenue and efficiency in the sale of two vintages of nitrous oxide emission allowances by the commonwealth of virginia in 2004 the three mechanisms considered were a combinatorial sealed bid csb auction a sequential english clock sec auction and a combinatorial english clock cec auction we find the sec and cec mechanisms to be superior the csb when demand is relatively elastic 2008 elsevier b v all rights reserved

social preferences self interest and the demand for redistribution preferences for redistribution may be influenced by values and beliefs about distributive justice as well as by self interest people may prefer more redistribution to the poor if they believe that poverty is caused by circumstances beyond individual control therefore beliefs about the causes of income may affect demand for redistribution alternatively the effect of these beliefs on redistributive preferences may be spurious if they are correlated with income and self interest is not properly controlled for they may also measure incentive cost concerns using social survey data i find that self interest cannot explain the effect of these beliefs on redistributive preferences 2001 elsevier science b v all rights reserved

the demand for and return to education when education outcomes are uncertain this article treats education as a sequential choice that is made under uncertainty a simple model is used to explore the effects of ability high school preparation preferences for schooling the borrowing rate and ex post payoffs to college on the probability of various post secondary college outcomes and the ex ante return to starting college the model motivates an empirical method of accounting for uncertainty about educational outcomes and for nonlinearity in the relationship between years of education and earnings when estimating the expected return to the first year of college

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

college entry by blacks since 1970 the role of college costs family background and the returns to education college enrollment of black 18 19 year old high school graduates declined from 1980 through 1984 and then rebounded after 1984 this paper presents data from a time series of cross sections of 18 19 year old youths from 1973 through 1988 to test the role of family background direct college costs local economic conditions and returns to college in driving these trends the evidence suggests that on the one hand increases in direct college costs were driving enrollment rates downward throughout the eighties on the other hand dramatic increases in average parental education for black youths exerted upward pressure on college enrollment by blacks particularly in the latter half of the decade the net effect of these two factors contributed to the pattern of decline and recovery observed during the eighties

collusion facilitating and collusion breaking power of simultaneous ascending and descending price auctions this article demonstrates that a robust tacit collusion evolves quickly in a collusion incubator environment but is destroyed by the simultaneous descending price auction theories of collusion producing behavior along with the detail of the states on which strategies are conditioned lead to a deeper understanding of how tacit collusion evolves and its necessary conditions these theories explain how the descending price auction destroys the collusion the experiments proceed by conducting simultaneous ascending price auctions in the collusion incubator then once the tacit collusion developed changing to the descending auction the change moved prices from collusive levels to near competitive levels

post secondary fees and the decision to attend a university or a community college abstract this paper examines the effect that post secondary fees have on a potential student s decision to start his or her college education at a university or a community college a theoretical model demonstrates that the student s decision follows a natural ordering that depends on his or her probability of graduation based on this natural ordering ordered probit is used to estimate the effect of interstate variation in fees on student attendance the results indicate that the own price effects of fee increases are negative while the cross price effects are positive