nep-des New Economics Papers
on Economic Design
Issue of 2018‒11‒05
five papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Signalling in Auctions: Experimental Evidence By Olivier Bos; Francisco Gomez-Martinez; Sander Onderstal; Tom Truyts
  2. k-price auctions and Combination auctions By Martin Mihelich; Yan Shu
  3. Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions By Gesche, Tobias
  4. Majority Judgment vs. Approval Voting By Michel Balinski; Rida Laraki
  5. The Losses from Integration in Matching Markets can be Large By Josu\'e Ortega

  1. By: Olivier Bos; Francisco Gomez-Martinez; Sander Onderstal; Tom Truyts
    Abstract: We study the relative performance of the first‐price sealed‐bid auction and the second-price sealed‐bid auction in a laboratory experiment where bidders can signal information through their bidding behaviour to an outside observer. We consider two different information settings: the auctioneer reveals either the identity of the winning bidder only, or she also reveals the winner’s payment to an outside observer. We find that the first‐price sealed‐bid auction in which the winner’s payment is revealed outperforms the other mechanisms in terms of revenue and efficiency. Our findings may have implications for the design of charity auctions, art auctions, and spectrum auctions.
    Keywords: auctions, signalling, experiments
    JEL: C92 D44 D92
    Date: 2018
  2. By: Martin Mihelich; Yan Shu
    Abstract: We provide an exact analytical solution of the Nash equilibrium for $k$- price auctions. We also introduce a new type of auction and demonstrate that it has fair solutions other than the second price auctions, therefore paving the way for replacing second price auctions.
    Date: 2018–09
  3. By: Gesche, Tobias
    Abstract: Using data from a large-scale sales campaign on eBay, I show that successful auction customers punish the seller through unfavorable public feedback when they later learn discover a cheaper fixed-price offer. The probability of receiving such feedback is four times bigger for auctions than for fixed -price sales of the same item from the same seller. Remarkably, this probability is increasing in the auction price, even though auction customers actively shaped this price themselves. In line with an explanation based on ex-post reference price shifts, this price effect is concentrated in a period during which reference prices were particularly salient because customers information about them, but not about idiosyncratic transaction features (e.g. quality), could change. Consistent with the reference price explanation, the difference in unfavorable feedback between auctions and fixed-price sales is also concentrated in this period and drops to a quarter of its initial size afterwards.
    Keywords: customer antagonism,pricing,reference prices,online reputation,eBay
    JEL: D44 D91 M31
    Date: 2018
  4. By: Michel Balinski (CREST; CNRS; Ecole Polytechnique); Rida Laraki (CNRS, LAMSADE, Université Paris-Dauphine; PSL; Department of Computer Science, University of Liverpool)
    Abstract: Majority judgment (MJ) and approval voting (AV) are compared in theory and practice. Criticisms of MJ and claims that AV is superior are refuted. The two primary criticisms have been that MJ is not "Condorcet-consistent" and that it admits the "no-show" paradox. That MJ is not Condorcet-consistent is a good property shared with AV: the domination paradox shows majority rule may well err in an election between two. Whereas the no-show paradox is in theory possible with MJ it is as a practical matter impossible. For those who believe this extremely rare phenomenon is important it is proven that MJ with three grades cannot admit the no-show paradox. In contrast; AV suffers from serious drawbacks because voters can only "tick" or "approve" candidates at best only Approve or Disapprove each candidate. With AV voters cannot express their opinions adequately; experiments show that Approve is not the opposite of Disapprove; and although AV does not admit the no-show paradox it admits the very closely allied "no-show syndrome and insensitivity." Two is too few. Substantive debate must concern three or more grades.
    Keywords: Majority judgment, majority rule, approval voting, Condorcetconsistency, domination paradox, no-show paradox, no-show syndrome.
    Date: 2018–10–01
  5. By: Josu\'e Ortega
    Abstract: Although the integration of two-sided matching markets using stable mechanisms generates expected gains from integration, I show that there are worst-case scenarios in which these are negative. The losses from integration can be large enough that the average rank of an agent's spouse decreases by 37.5% of the length of their preference list in any stable matching mechanism.
    Date: 2018–10

This nep-des issue is ©2018 by Guillaume Haeringer and Alex Teytelboym. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.