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on Economic Design |
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Issue of 2019‒07‒08
ten papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Federico Zincenko |
| Abstract: | We consider testing for risk aversion in fi rst-price sealed-bid auctions with symmetricbidders and independent private values: the parameters are the bidders' utility function andvaluation distribution. First, we show that any test based on a sample of bids will generally beinconsistent and it will fail to detect any sequence of local alternatives converging to the null of riskneutrality. Second, we introduce restrictions on the parameter space, which are implied by Guerre,Perrigne, and Vuong (2009)'s exclusion restriction, and then we develop a consistent nonparametrictest that controls the limiting size and detects local alternatives at the parametric rate. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:6641&r=all |
| By: | Giovanni Compiani (University of California, Berkeley, Haas School of Business); Philip A. Haile (Cowles Foundation, Yale University); Marcelo Sant'Anna (FGV EPGE) |
| Abstract: | In a "common values" environment, some market participants have private information relevant to others' assessments of their own valuations or costs. Economic theory shows that this type of informational asymmetry can have important implications for market performance and market design. Yet even for the classic example of an oil lease auction, formal evidence on the presence and strength of common values has been limited by the problem of auction-level unobserved heterogeneity that is likely to affect both participation in an auction and bidders' willingness to pay. Here we develop an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. We show that important features of the model are nonparametrically identified and apply a semiparametric estimation approach to data from U.S. offshore oil and gas lease auctions. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity - three distinct phenomena with different implications for policy and empirical work - are all present. Failing to account for unobserved heterogeneity obscures the empirical evidence of common values. We examine the implications of our estimates for the classic revenue ranking of sealed bid auction designs, and for the interaction between affiliation, the winner's curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2137r&r=all |
| By: | Mostapha Diss (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Eric Kamwa (LC2S - Laboratoire caribéen de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles); Abdelmonaim Tlidi (ENSA Marrakech - École nationale des sciences appliquées de Marrakech) |
| Abstract: | Given a collection of individual preferences on a set of candidates and a desired number of winners, a multi-winner voting rule outputs groups of winners, which we call committees. In this paper, we consider five multi-winner voting rules widely studied in the literature of social choice theory: the k-Plurality rule, the k-Borda rule, the k-Negative Plurality rule, the Bloc rule, and the Chamberlin-Courant rule. The objective of this paper is to provide a comparison of these multi-winner voting rules according to many principles by taking into account a probabilistic approach using the well-known Impartial Anonymous Culture (IAC) assumption. We first evaluate the probability that each pair of the considered voting rules selects the same unique committee in order to identify which multi-winner rules are the most likely to agree for a given number of candidates and a fixed target size of the committee. In this matter, our results show that the Chamberlin-Courant rule and the k-Plurality rule on one side, and the k-Borda rule and the Bloc rule on the other side, are the pairs of rules that most agree in comparison to other pairs. Furthermore, we evaluate the probability of every multi-winner voting rule selecting the Condorcet committee à la Gehrlein when it exists. The Condorcet committee à la Gehrlein is a fixed-size committee such that every member defeats every non-member in pairwise comparisons. In addition, we compare the considered multi-winner voting rules according to their ability (susceptibility) to select a committee containing the Condorcet winner (loser) when one exists. Here, our results tell us that in general, the k-Borda rule has the highest performance amongst all the considered voting rules. Finally, we highlight that this paper is one of the very rare contributions in the literature giving exact results under the Impartial Anonymous Culture (IAC) condition for the case of four candidates. |
| Keywords: | Scoring rules,Chamberlin-Courant,Borda,Condorcet,Voting,Committee |
| Date: | 2019–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02147735&r=all |
| By: | Luís Aguiar-Conraria (Department of Economics / NIPE, University of Minho); Pedro C. Magalhães (Institute of Social Sciences, University of Lisbon); Christoph A. Vanberg (Alfred-Weber-Institut, University of Heidelberg) |
| Abstract: | Many political systems with direct democracy mechanisms have adopted rules preventing decisions from being made by simple majority rule. The device most commonly added to majority rule in national is a quorum requirement. The two most common are the participation and the approval quora. Such rules are a response to three major concerns: the legitimacy of the referendum outcome, its representativeness (the concern with the outcome representing the will of the whole electorate), and protection of minorities regarding issues that should demand a broad consensus. Guided by a pivotal voter model, we conduct a laboratory experiment to investigate the performance of different quora in reaching such goals. We introduce two main innovations in relation to previous work on the topic. First, part of the electorate goes to the polls out of a sense of civic duty. Second, we test the performance of a different quorum, the rejection quorum, recently proposed in the literature. We conclude that, depending on the preferred criterion, either the approval or the rejection quorum is to be preferred. |
| Keywords: | Election Design; Participation Quorum; Approval Quorum; Laboratory Experiment |
| JEL: | C91 D72 D02 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:03/2019&r=all |
| By: | Lluis Bru; Daniel Cardona; Jozef Sakovics |
| Abstract: | We study how a buyer unable to price discriminate should satisfy his demand in the presence of diseconomies of scale in production. Defying the Coase Conjecture, we show that auctioning contracts for lots (block sourcing) followed by setting a price to realize (part of) the residual gains from trade a ways leads to higher buyer surplus than simply setting a price. |
| Keywords: | block sourcing, lot auction, monopoly, procurement, residual market, split awards |
| JEL: | D42 D44 L12 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:291&r=all |
| By: | Hitoshi Matsushima (Faculty of Economics, The University of Tokyo) |
| Abstract: | This study indicates that the improper uses of a public blockchain disable real-world governance in organizations and marketplaces. By using any basic application of smart contracts, such as escrow transactions, along with a revelation mechanism outside the blockchain, individuals can execute illegal cartel acts in a self-enforcing and non-judicial manner. Cartel members can then implement collective deviations without help from trusted intermediaries or any requirements on reputation or word-of-honor. We show that a first price auction is vulnerable to cartel threats even if the seller can hide bidders' prices because bidders take a countermeasure to hidden prices by using blockchain. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2019cf1119&r=all |
| By: | Korpela, Ville; Lombardi, Michele |
| Abstract: | Agents are farsighted when they consider the ultimate results to which their own actions may lead to. We re-examine the classical questions of implementation theory under complete information in a setting with transfers where farsighted coalitions are regarded as fundamental behavioral units and the equilibrium outcomes of their interactions are predicted via the stability notion of the largest consistent set. The designer's exercise consists of designing a rights structure, which formalizes the idea of power distribution in society. His or her challenge lies in designing a rights structure in which the equilibrium behavior of agents always coincides with the recommendation given by a social choice function. We show that (Maskin) monotonicity fully identifies the class of social choice functions that are implementable by a rights structure. We also discuss how this result changes when social choice correspondences are considered. |
| Keywords: | Farsightedness; implementation; transfers; rights structures; coaltions; largest consistent set; monotonicity |
| JEL: | C71 D71 D82 |
| Date: | 2019–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94436&r=all |
| By: | Attar, Andrea; Campioni, Eloisa; Piaser, Gwenaël |
| Abstract: | We study games in which principals simultaneously post mechanisms in the presence of several agents. We evaluate the role of principals’ communication in these settings. As in Myerson (1982), each principal may generate incomplete information among agents by sending them private signals. We show that this channel of communication, which has not been considered in standard approaches to competing mechanisms, has relevant strategic effects. Specifically, we construct an example of a complete information game in which (multiple) equilibria are sustained as in Yamashita (2010) and none of them survives in games in which all principals can send private signals to agents. The corresponding sets of equilibrium allocations are therefore disjoint. The role of private communication we document may hence call for extending the construction of Epstein and Peters (1999) to incorporate this additional element. |
| Keywords: | Competing Mechanisms; Private Communication |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:123148&r=all |
| By: | Ginzburg, Boris |
| Abstract: | A number of candidates are competing for a prize. Each candidate is privately informed about his type. The decision-maker who allocates the prize wants to give it to the candidate with the highest type. Each candidate can take a test that reveals his type at a cost. I show that if competition increases, candidates reveal more information when the cost is high, and less information when it is low. Nevertheless, the decision-maker always benefits from greater competition. If competition is large, mandatory disclosure is Pareto-dominated by voluntary disclosure. When the test is noisier, candidates are more likely to take it. |
| Keywords: | information disclosure, testing, competition |
| JEL: | D82 D83 |
| Date: | 2019–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94605&r=all |
| By: | Puzon, Klarizze (Institute of Social and Economic Research, Osaka University); Willinger, Marc (University of Montpellier) |
| Abstract: | We study experimentally a two-stage common pool resource game. In the first stage, selected members of the group determine the level of protection for the resource. The protected fraction of the resource is equally shared among group members. In the second stage, the unprotected fraction of the resource is competed for. We consider three institutions varying in the extent by which subjects participate in the first stage: vote (all group members participate), dictator (only one member decides), and outsider (no one participates). We also vary the initial level of the resource: scarce or abundant. We establish the following results. First, we find that voting provides more frequent protection and leads to higher protection levels than other institutions. Second, collective rent-seeking is larger when the level of the resource is high, but this tendency is sharply reduced in the presence of democratic institutions. Third, collective rent-seeking is negatively affected by the level of protection, but significantly so only when the highest protection level is implemented. These experimental results are stronger in the case of a resource boom than in the case of a resource bust. |
| Keywords: | voting; commons; natural resources; property rights; experiments |
| JEL: | C90 D02 D72 P48 |
| Date: | 2019–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2019_009&r=all |