nep-des New Economics Papers
on Economic Design
Issue of 2018‒05‒28
three papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Unobserved Heterogeneity in Auctions under Restricted Stochastic Dominance By Yao Luo
  2. Condorcet Efficiency of the Preference Approval Voting and the Probability of Selecting the Condorcet Loser By Eric Kamwa
  3. Simulation and Evaluation of Zonal Electricity Market Designs By Hesamzadeh, M.; Holmberg, P.; Sarfati, M.

  1. By: Yao Luo
    Abstract: We study the identification of first-price auctions with nonseparable unobserved heterogeneity. In particular, we extend Hu, McAdams, and Shum (2013) by relaxing the first-order stochastic dominance condition. Instead, we assume restricted stochastic dominance relations among the value quantile functions and show that the same relations pass to the bid quantile functions. An ordered tree summarizes these relations and provides a total ordering. Relying on the proposed restricted stochastic dominance ordering, we extend a list of identification results in the empirical auction literature.
    Keywords: Restricted Stochastic Dominance, Unobserved Heterogeneity, Identification, Misclassification, Auction, Risk Aversion
    JEL: C14 D44
    Date: 2018–05–19
  2. By: Eric Kamwa (LC2S - Laboratoire Caribéen de Sciences Sociales - UAG - Université des Antilles et de la Guyane)
    Abstract: Under Approval Voting (AV), each voter just distinguishes the candidates he approves of from those appearing as unacceptable. The Preference Approval Voting (PAV) is a hybrid version of the approval voting first introduced by Brams and Sanver (2009). Under PAV, each voter ranks all the candidates and then indicates the ones he approves. In this paper, we provide analytical representations for the probability that PAV elects the Condorcet winner when she exists in three-candidate elections with large electorates. We also provide analytical representations for the probability that PAV elects the Condorcet loser. We perform our analysis by assuming the assumption of the Extended Impartial Culture. Under this assumption, it comes that AV seems to perform better than PAV on electing the Condorcet winner and that in most of the cases, PAV seems to be less likely to elect the Condorcet loser than AV.
    Keywords: Approval Voting,Ranking,Condorcet,Extended Impartial Culture,Probability
    Date: 2018–05–05
  3. By: Hesamzadeh, M.; Holmberg, P.; Sarfati, M.
    Abstract: Zonal pricing with countertrading (a market-based redispatch) gives arbitrage opportunities to the power producers located in the export-constrained nodes. They can increase their profit by increasing the output in the day-ahead market and decrease it in the real-time market (the inc-dec game). We show that this leads to large inefficiencies in a standard zonal market. We also show how the inefficiencies can be significantly mitigated by changing the design of the real-time market. We consider a two-stage game with oligopoly producers, wind-power shocks and real-time shocks. The game is formulated as a two-stage stochastic equilibrium problem with equilibrium constraints (EPEC), which we recast into a two-stage stochastic Mixed-Integer Bilinear Program (MIBLP). We present numerical results for a six-node and the IEEE 24-node system.
    Keywords: Two-stage game, Zonal pricing, Wholesale electricity market, Bilinear programming
    JEL: C61 C63 C72 D43 L13 L94
    Date: 2018–05–03

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