optimal nonparametric estimation of first price auctions this paper proposes a general approach and a computationally convenient estimation procedure for the structural analysis of auctioni data considering first price sealed bid auction models within the independent private value paradigm we show that the underlying distribution of bidders private values is identified from observed bids and the number of actual bidders without any parametric assumptions using the theoiy of minimax we establish the best rate of uniform convergence at which the latent density of private values can be estimated nonparametrically from available data we then propose a two step kernel based estimator that converges at the optimal rate

dynamics of brand competition effects of unobserved social networks brand competition is modelled using an agent based approach in order to examine the long run dynamics of market structure and brand characteristics a repeated game is designed where myopic firms choose strategies based on beliefs about their rivals and consumers consumers are heterogeneous and can observe neighbour behaviour through social networks although firms do not observe them the social networks have a significant impact on the emerging market structure presence of networks tends to polarize market share and leads to higher volatility in brands yet convergence in brand characteristics usually happens whenever the market reaches a steady state scale free networks accentuate the polarization and volatility more than small world or random networks unilateral innovations are less frequent under social networks

secret versus public reserve price in an outcry english procurement auction experimental results abstract in a set of human experiments we analyze the impact of the buyer s reserve price policy in an online open outcry reverse auction we measure the impact of revealing or not the reserve price on the buyer s expected cost when suppliers may be risk averse results confirm that the optimal public reserve price policy dominates for the buyer when the lowest cost supplier is weakly risk averse but in contrast with theory the secret reserve price policy does not dominate when he becomes very risk averse analysis of strategic suppliers bidding behavior shows in conformity with theory that they react to the secret reserve price and are more aggressive when they are more risk averse this explains why the optimal public reserve price does not perform better in this context but is equivalent to the secret one however strongly risk averse bidders are less aggressive than predicted by theory that is why the secret reserve price policy does not strictly dominate

structural estimation of the affiliated private value auction model we consider the structural estimation of the affiliated private value apv model in first price sealed bid auctions the model allows for bidders individual efficiencies and opportunity costs while permitting dependence among bidders private values through affiliation we establish the nonparametric identification of the apv model characterize its theoretical restrictions and propose a computationally convenient and consistent two step nonparametric estimation procedure for estimating the joint private value distribution from observed bids using simulated bid data we provide a step by step guide on how to implement our procedure and show the good behavior of our estimator in small samples

new microfoundations for the aggregate matching function empirical studies of the aggregate labor market matching function have favored a cobb douglas functional form for which there are no microfoundations in the existing literature i present a new model for the matching process based on a telephone line poisson queuing process which unlike other microeconomic approaches can be integrated directly into standard theoretical search models this implies a ces matching function approximately cobb douglas when search costs are approximately linear the model allows empirical estimates of matching function parameters to be interpreted in terms of the costs and benefits of search

strategic delay in bargaining this paper analyses a bargaining model with incomplete information in which the time between offers is an endogenous strategic variable we find equilibria involving a delay to agreement that is due to the use of strategic time delay by bargainers to signal their relative strength under some specifications of the parameters delay is present in the unique sequential equilibrium whose beliefs satisfy one intuitive restriction this delay does not vanish as the minimal time between offers becomes small

a search interpretation of male female wage differentials a general equilibrium search framework is used to examine the role of gender differences in labor market behavior patterns e g quit rates for personal reasons in determining gender wage differentials for samples of high school and college graduates from the national longitudinal survey of youth nlsy these behavioral patterns are found to be significantly different across the sexes and account for 20 30 of the wage differentials in particular they play a key role in explaining the male female wage differential that remains after controlling for the gender composition across occupations

grain price spikes and beggar thy neighbor policy responses a global economywide analysis when prices spike in international grain markets national governments often reduce the extent to which that spike affects their domestic food markets those actions exacerbate the price spike and international welfare transfer associated with the terms of trade change several recent analyses have assessed the extent to which those policies contributed to the 2006 08 international price rise but only by focusing on one commodity or using a back of the envelope method this paper provides a more comprehensive analysis that uses a global economywide model that is able to take account of the interactions between markets for farm products that are closely related in production or consumption the model is able to estimate the impacts of those insulating policies on grain prices and on the grain trade and economic welfare of various countries the results support the conclusion from earlier studies that there is a need for stronger world trade organization disciplines on export restrictions

the economic effect of immigration policies analyzing and simulating the u s case abstract in this paper we analyze the economic effects of different immigration policies using a model that incorporates economic and policy features crucial to understanding the migrant flows into the us we differentiate among the most relevant channels of immigration to the us family based employment based and undocumented moreover we explicitly account for earning incentives to migrate and for the role of immigrant networks in generating immigration opportunities hence we can analyze the effect of policy changes through those channels in our simulations comparing long run steady states highly skilled employment and unskilled immigrants generate larger surplus to us firms than natives do hence policies restricting their entry either directly or indirectly have a depressing effect on job creation and in turn on native labor markets our analysis gives new insights into the effect of policies as it accounts for the endogenous immigration response which is overlooked by most existing models

inference in nonlinear econometric models with structural change this paper extends the classical test for structural change in linear regression models see chow 1960 to a wide variety of nonlinear models estimated by a variety of different procedures wald lagrange multiplier like and likelihood ratio like test statistics are introduced the results allow for heterogeneity and temporal dependence of the observations in the process of developing the above tests the paper also provides a compact presentation of general unifying results for estimation and testing in nonlinear parametric econometric models

timber sale auctions with random reserve prices this paper analyzes first price sealed bid auctions of standing timber organized by the french forest service office national des forets onf a feature of these auctions is that they are held wi

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

the emergence of generalized exchange the existence of generalized exchange characterized by unilateral resource giving has been a puzzle when we assume rational actors because free riding can occur this article first identifies pure generalized exchange in which each actor gives resources to the recipient s of his choice then it proposes the fairness based selective giving strategy an actor adopting this strategy selects a recipient whose behaviors satisfy her criterion of fairness provided perfect information is given the results of evolutionary simulation show that pure generalized exchange can emerge among egoists without collective norms even in societies in which individuals have information only about their immediate neighbors

strategic delay in bargaining with two sided uncertainty the role of strategic delay is analyzed in an infinite horizon alternating offer model of bargaining a buyer and seller are engaged in the trade of a single object both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly an equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer a bargainer expecting large gains from trade is more impatient than one expecting small gains and hence makes concessions earlier on trade occurs whever gains from trade exist but due to the private information only after costly delay panmunjom korea upi the american general and the north korean general glared at each other across the table and the only sound was the wind howling across the barren hills outside their hut maj gen james b knapp negotiator for the united nations command unc was waiting for maj gen ri choonsun of the democratic people s republic of north korea to propose a recess they sat there arms folded for 42 hours not a word finally gen ri got up walked out and drove away evening bulletin philadelphia 11 april 1969

social contacts and occupational choice social contacts help workers to find jobs but those jobs need not be in the occupations where workers are most productive hence social contacts can generate mismatch between a worker s occupational choice and his comparative productive advantage thus economies with dense social networks can exhibit apparently low labor force quality and as a result low returns to firms investment and depressed aggregate productivity we employ us and european data for the 1990 s to test the key prediction that social contacts distort workers occupational choices in a direction that reduces their apparent productivity we find that the use of social contacts helps find jobs one to two months sooner but leads to individual wage discounts of 5 to 7 and produces negative externalities on aggregate productivity

entry and competition effects in first price auctions theory and evidence from procurement auctions motivated by several interesting features of the highway mowing auction data from the texas department of transportation tdot we study three competing procurement auction models with endogenous entry our entry and bidding models provide several interesting implications for the first time we show that even within an independent private value paradigm as the number of potential bidders increases bidders equilibrium bidding behaviour can become less aggressive and the expected procurement cost may rise because the entry effect is always positive and may dominate the negative competition effect we then develop structural models of entry and bidding corresponding to the three models under consideration controlling for unobserved auction heterogeneity and use the recently developed semi parametric bayesian estimation method to analyse the data we select the model that best fits the data and use the corresponding structural estimates to quantify the entry effect and the competition effect with regard to the individual bids and the procurement cost copyright 2009 wiley blackwell

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

with a little help from my friends quality of social networks job finding and job match quality this paper studies the effect of network quality on job finding and job match quality using longitudinal data and a direct measure of network quality which is based on the employment of friendship ties various identification strategies provide robust evidence that a higher number of employed contacts increases the job finding rate network quality also increases wages for high skilled workers forming networks with non familial contacts instead for low skilled workers more employed familial contacts lead to a negative but not significant effect on wages these findings reconcile previous mixed evidence of network effects on wages indicating heterogeneity by skill level and relationship type

why are similar workers paid differently the role of social networks abstract we provide a matching model where identical workers are embedded in ex ante identical social networks job arrival rate is endogenous and wages are bargained we study the evolution of networks over time and characterize the equilibrium distribution of unemployment rates across networks within our framework wage dispersion arises endogenously as the consequence of the dynamics of networks firms strategies and wage bargaining we show that networks induce new search externalities which shape the dynamics of the labor market our endogenous framework allows us to quantify these effects

knowledge sharing and the dynamics of social capital abstract mutual aid often entails the sharing of knowledge we investigate how in turn knowledge sharing affects the long run dynamics of mutual aid in our economy agents with specific knowledge are held up by their principals inside communities agents aid each other by sharing their specific knowledge this process generates a new type of knowledge which exacerbates the specificity of the existing types and induces more agents to engage in mutual aid however since the knowledge generated is shared it progressively renders agents inside communities more flexible and thus less dependent on mutual aid we characterize conditions under which in the long run mutual aid spreads or is abandoned

econometrics of first price auctions in this paper we propose an estimation method for the empirical study of theoretical auction models we focus on first price sealed bid and descending auctions and we adopt the private value paradigm where each bidder is assumed to have a different private value only known to him for the object that is auctioned following mcfadden 1989 and pakes and pollard 1989 our proposed method is based on simulations specifically the method relies on a simulated nonlinear least squares objective function appropriately adjusted so as to obtain consistent estimates of the parameters of interest we illustrate the proposed method by studying a market of agricultural products where descending auctions are used our analysis takes into account heterogeneity of the auctioned objects and the fact that only the winning bid is observed we estimate the parameters that characterize the distribution of the unobserved private values for each auctioned object

secret reserve prices in a bidding model with a re sale option this paper presents an auction model in which the seller may choose not to sell in spite of receiving a bid above the announced reserve price such behavior is seen frequently in auctions yet would be suboptimal within most existing models here the seller uses resale to signal information about the object s value that could not be easily communicated via a reserve price announcement the model predicts that bids for reauctioned objects increase relative to initial bids and that on average prices of both reauctioned items and those sold at initial auction rise as delay in reauctioning increases copyright 1997 by american economic association

hiring through referrals abstract an equilibrium search model of the labor market is combined with a social network the key features are that the workers network transmits information about jobs and that wages and firm entry are determined endogenously empirically the inter industry variation in aggregate matching efficiency is attributed to variation in referral use the model predicts that the efficiency of the aggregate matching function is pro cyclical which is consistent with empirical evidence

networks and farsighted stability the main contribution of this paper is to provide a framework in which the notion of farsighted stability for games introduced by chwe 1994 can be applied to directed networks in particular we introduce the notion of a supernetwork a supernetwork is made up of a collection of directed networks the nodes and uniquely represents via the arcs connecting the nodes agent preferences and the rules governing network formation by reformulating chwe s basic result on the nonemptiness of farsightedly stable sets we show that for any supernetwork i e for any collection of directed networks and any collection of rules governing network formation there exists a farsightedly stable directed network we also introduce the notion of a nash network relative to a given supernetwork as well as the notions of symmetric nonsimultaneous and decomposable supernetworks to illustrate the utility of our framework we present several examples of super networks compute the farsightedly stable networks and the nash networks

networks in labor markets wage and employment dynamics and inequality we present a model of labor markets that accounts for the social network through which agents hear about jobs we show that both wages and employment are positively associated a strong form of correlation across time and agents we also analyze the decisions of agents regarding staying in the labor market or dropping out if there are costs to staying in the labor market then networks of agents that start with a worse wage status will have higher drop out rates and there will be a persistent differences in wages between groups according to the starting states of their networks

explaining u shape of the referral hiring pattern in a search model with heterogeneous workers this paper presents a search model with heterogeneous workers social networks and endogenous search intensity there are three job search channels costly formal applications and two costless informal channels through family and professional networks our model explains a u shape referral hiring pattern observed in empirical studies and a strong selection of workers on productivity across the three channels moreover combining family and professional referrals into one informal channel may generate a spurious result of wage premiums penalties if high low productivity workers are dominating in the empirical data and their productivity is not fully observable to the econometrician

auctioning and bargaining an econometric study of timber auctions with secret reservation prices this article considers a first price sealed bid auction at which the seller s reservation price is not announced in advance we allow for a second round of bargaining and consider the nash bargaining outcome when the object is unsold after the auctioning round we characterize the bidders and seller s bayesian nash equilibrium strategies the distributions of the buyers and seller s private values are estimated by nonlinear least squares from auction data on standing timber while solving numerically the differential equations characterizing the seller s and buyers equilibrium strategies the performance of the estimated model is then compared to a model in which the players behave myopically

multi round procurement auctions with secret reserve prices theory and evidence when a secret reserve price is used in an auction the auctioneer cannot guarantee that the good can be sold out at the auction and can reauction the unsold objects in the next round motivated by this interesting feature observed in the procurement auctions organized by the indiana department of transportation we construct a dynamic bidding model in multi round procurement auctions with secret reserve prices and evaluate how the release of the auctioneer s reserve price affects bidders bidding behavior and the auctioneer s expected payment our theoretical model predicts that the equilibrium bids uniformly decline over stages and the numerical analysis of our model indicates that hiding the reserve price may be better than announcing it for the auctioneer under some specifications of underlying distributions we develop an empirical model with bidders discount factor equal to zero to recover the unknown structural parameters and to conduct counterfactual analyses copyright 2008 john wiley sons ltd

the effects of social networks on employment and inequality we develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts we show that employment is positively correlated across time and agents moreover unemployment exhibits duration dependence the probability of obtaining a job decreases in the length of time that an agent has been unemployed finally we examine inequality between two groups if staying in the labor market is costly and one group starts with a worse employment status then that group s drop out rate will be higher and their employment prospects will be persistently below that of the other group

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

farsighted network formation this paper studies a model of dynamic network formation when individuals are farsighted players evaluate the desirability of a current move in terms of its consequences on the entire discounted stream of payoffs we define a concept of equilibrium which takes into account farsighted behavior of agents and allows for limited cooperation amongst agents we show that an equilibrium process of network formation exists we also show that there are valuation structures in which no equilibrium strategy profile can sustain efficient networks we then provide sufficient conditions under which the equilibrium process will yield efficient outcomes

old boy networks as screening mechanisms this paper studies a fulfilled expectations equilibrium in situations in which intermediaries provide personal opinions on the likelihood of success of personnel projects or investments each referee must recommend some candidates from a group of people about whom he has private information the employer uses the recommendations to choose the workers using his expectations about the quality of the recommended and the nonrecommended applicants although the referees use their information strategically the competition among them produces optimal use of the information in the sense that employers make the same choices in equilibrium as they would if they had the same information as the referees

the empirical content of the job search model labor mobility and wage distributions in europe and the us abstract job search models of the labor market hypothesize a very tight correspondence between the determinants of labor turnover and individual wage dynamics on one hand and the determinants of wage dispersion on the other this paper offers a systematic examination of whether this correspondence is present in the data by estimating a rudimentary partial equilibrium job search model on a three year panel of individual worker data covering 10 european countries and the u s we find that our basic job search model fits the data surprisingly well this also allows us to point at a number of interesting empirical regularities about wage distributions our results suggest that cross sectional data on individual wages contain the basic information needed to obtain a reliable measure of the magnitude of labor market frictions as measured by a parameter of the canonical job search model finally we use our results in a cross country comparison of the intensity and nature of job to job turnover we arrange countries into two different groups according to their turnover intensity we further show that the nature of job to job turnover is very different between those two groups turnover is predominantly voluntary in low turnover countries whereas it is to a large extent involuntary in high turnover countries

identification of standard auction models this paper presents new identification results for models of first price second price ascending english and descending dutch auctions we consider a general specification of the latent demand and information structure nesting both private values and common values models and allowing correlated types as well as ex ante asymmetry we address identification of a series of nested models and derive testable restrictions enabling discrimination between models on the basis of observed data the simplest model symmetric independent private values is nonparametrically identified even if only the transaction price from each auction is observed for richer models identification and testable restrictions may be obtained when additional information of one or more of the following types is available i the identity of the winning bidder or other bidders ii one or more bids in addition to the transaction price iii exogenous variation in the number of bidders iv bidder specific covariates while many private values pv models are nonparametrically identified and testable with commonly available data identification of common values cv models requires stringent assumptions nonetheless the pv model can be tested against the cv alternative even when neither model is identified

on delay in bargaining with one sided uncertainty recently attention has been given to a model of two person bargaining in which the parties alternate making offers and there is uncertainty about the valuation of one party the purpose of the analysis has been to identify delay to agreement with a screening process where agents with relatively lower valuations distinguish themselves by waiting longer to settle we point out a fundamental difficulty with this program by demonstrating that the assumptions used in the literature allow for delay only in so far as the time between offers is significant

some contacts are more equal than others informal networks job tenure and wages the explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer an alternative explanation is that workers rely on informal information sources as a last resort such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality this article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts

bidding off the wall why reserve prices may be kept secret abstract this note shows by means of an example that in a common value auction a seller with a random reservation value can increase her ex ante expected profits by following a policy of conducting an auction in which her reserve price is kept secret compared to an auction in which the reserve price is announced by keeping the reserve price secret the seller is able to encourage greater participation from the bidders and can therefore increase the linkage of the price paid to the value of the purchased object journal of economic literature classification numbers d82 d44

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

matchmaker matchmaker the effect of old boy networks on job match quality earnings and tenure firms often view job applicant referrals from current employees as more informative than direct applications or referrals through formal labor market intermediaries such as placement firms we argue that old boy networks reduce employers uncertainty about worker productivity using jovanovic s job matching model we show that workers hired through the old boy network should 1 earn higher initial salaries 2 experience lower subsequent wage growth on the job and 3 stay on the job longer than otherwise comparable workers hired from outside the network we find considerable support for this theory using data from the 1972 survey of natural and social scientists and engineers