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on Economic Design |
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Issue of 2019‒12‒02
six papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Takehiro Kawasaki; Nathanael Barrot; Seiji Takanashi; Taiki Todo; Makoto Yokoo |
| Abstract: | Auctions via social network, pioneered by Li et al. (2017), have been attracting considerable attention in the literature of mechanism design for auctions. However, no known mechanism has satisfied strategy-proofness, non-deficit, non-wastefulness, and individual rationality for the multi-unit unit-demand auction, except for some naive ones. In this paper, we first propose a mechanism that satisfies all the above properties. We then make a comprehensive comparison with two naive mechanisms, showing that the proposed mechanism dominates them in social surplus, seller's revenue, and incentive of buyers for truth-telling. We also analyze the characteristics of the social surplus and the revenue achieved by the proposed mechanism, including the constant approximability of the worst-case efficiency loss and the complexity of optimizing revenue from the seller's perspective. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1911.08809&r=all |
| By: | Rosa, Benjamin |
| Abstract: | I study the impact of bid credits in simultaneous ascending auctions in a model where bidders potentially have complementary values. Although bid credits can lead to a more equitable distribution of items, I find an additional unintended consequence: bidders without credits are more exposed to winning a less desirable set of items and will drop out of the auction sooner when their competitors have credits. Calibrating the model to data from the Federal Communication Commission’s sale of licenses in the 700 MHz guard bands, I find exposure reduced average non-credited dropout values by 5.7 percent but did not decrease revenues. |
| Keywords: | Bid Credits; Simultaneous Ascending Auctions; FCC |
| JEL: | D44 D45 H25 |
| Date: | 2019–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96895&r=all |
| By: | Ethan Che |
| Abstract: | We study a seller who sets a reserve price in a second price auction with uncertainty over the joint distribution of bidders' valuations. The seller only knows the mean of the marginal distribution of each bidder's valuation and the range, and an adversarial nature chooses the worst-case distribution within this ambiguity set. We use a dual characterization to solve for this distribution. We find that the seller's optimal reserve price tends to be low and converges to zero in probability as the number of bidders increases. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1911.07103&r=all |
| By: | Ekaterina Serikova |
| Abstract: | The paper provides a fresh look at the role of daytime auctions in intraday periodicity of stock returns. First, I show that daytime auctions, together with market opening and market closing intervals, drive the periodicity of stock returns. Second, by applying the model of infrequent rebalancing, I find that price impact is the highest during the fifteen-minute interval after daytime auctions. Combining this evidence with high realized returns, high volume changes and high return volatility, I conclude that after-auction periods take over a large share of infrequent rebalancing, being attractive for a concentration of liquidity traders. Small, low-fragmented stocks heavily traded on the home market show the strongest evidence for infrequent rebalancing after the daytime auctions. Finally, I show that post-auction returns predict returns before the US market opening and before the domestic market closing, which might be further evidence on clustered liquidity trading. |
| Keywords: | Market microstructure, market design, auctions, intraday periodicity |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2019:14&r=all |
| By: | Yeon-Koo Che; Jinwoo Kim; Fuhito Kojima |
| Abstract: | We develop a theory of monotone comparative statics based on weak set order, or in short weak monotone comparative statics, and identify the enabling conditions in the context of individual choices, Pareto optimal choices for a coalition of agents, and Nash equilibria of games. Compared with the existing theory based on strong set order, the conditions for weak monotone comparative statics are weaker, sometimes considerably, in terms of the structure of the choice environment and underlying preferences of agents. We apply the theory to establish existence and monotone comparative statics of Nash equilibria in games with strategic complementarities and of stable many-to-one matchings in two-sided matching problems, allowing for general preferences that accommodate indifferences and incomplete preferences. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1911.06442&r=all |
| By: | Zhang, Hanzhe (Michigan State University, Department of Economics) |
| Abstract: | This paper investigates pre-matching gambles and provides a new reason to gamble: matching concerns. Examples of pre-matching gambles include occupational choices before the marriage market, college major choices before the labor market, and portfolio management before attracting future clients in the financial market. I show that people make risky investments they would not have made if they do not subsequently participate in a competitive matching market. A fundamental and unique feature of the competitive matching market, which I call the competitive matching effect, induces gambling. The paper also illustrates the relationship between social efficiency and inequality in this setting, and shows how progressive taxation eliminates social inefficiency, reduces inequality, and generates government revenue. |
| Keywords: | risk taking; investment and matching; competitive matching effect; efficiency and inequality; progressive taxation |
| JEL: | C78 D31 J41 |
| Date: | 2019–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:ris:msuecw:2019_012&r=all |