nep-des New Economics Papers
on Economic Design
Issue of 2018‒10‒22
three papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Deduction Dilemmas: The Taiwan Assignment Mechanism By Umut M. Dur; Parag A. Pathak; Fei Song; Tayfun Sönmez
  2. License Complementarity and Package Bidding: The U.S. Spectrum Auctions By Mo Xiao; Zhe Yuan
  3. Sequential Auctions for Live Cattle: Does Order Matter? By Li, Yunhan; Shonkwiler, J. Scott

  1. By: Umut M. Dur; Parag A. Pathak; Fei Song; Tayfun Sönmez
    Abstract: This paper analyzes the properties of the Taiwan mechanism, used for high school placement nationwide starting in 2014. In the Taiwan mechanism, points are deducted from an applicant's score with larger penalties for lower ranked choices. Deduction makes the mechanism a new hybrid between the well-known Boston and deferred acceptance mechanisms. Our analysis sheds light on why Taiwan's new mechanism has led to massive nationwide demonstrations and why it nonetheless still remains in use.
    JEL: I20
    Date: 2018–09
  2. By: Mo Xiao (Eller College of Management, University of Arizona.); Zhe Yuan (Alibaba Group)
    Abstract: The U.S. spectrum licenses cover geographically distinct areas and are often complementary to each other. A bidder seeking to acquire multiple licenses is then exposed to risks of winning only isolated patches. To allocate licenses more efficiently, the Federal Communications Commission allowed bidders to bid for (predefined) packages of licenses in Auction 73. We estimate the magnitude of license complementarity by modeling the bidding process as an entry game with interdependent markets and evolving bidder belief. Bidders' decisions on bidding (and not bidding) provide bounds on licenses' stand-alone values and complementarity between licenses. We estimate the total complementarity to be around two thirds of the total bidding ($19 billion) in Auction 73. Complementarity in a 1 MHz nationwide license is worth $918 million to an average large bidder but only $120 million to an average small bidder. Our counterfactual analysis shows that the effects of package bidding on bidders' exposure risks depend on package format and package size. More importantly, mixed package bidding increases FCC revenue substantially at the cost of reducing bidder surplus and increasing license allocation concentration.
    Keywords: Spectrum Auctions, Complementarity, Package Bidding, Moment Inequalities
    JEL: L5 L8
    Date: 2018–09
  3. By: Li, Yunhan; Shonkwiler, J. Scott
    Keywords: Demand and Price Analysis, Behavioral & Institutional Economics, Ag Finance and Farm Management
    Date: 2018–06–20

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