Behavioral Economics Commons^™

Prediction Markets To Forecast Electricity Demand, Peter Cramton, Luciano De Castro

Luciano I. de Castro

Forecasting electricity demand for future years is an essential step in resource planning. A common approach is for the system operator to predict future demand from the estimates of individual distribution companies. However, the predictions thus obtained may be of poor quality, since the reporting incentives are unclear. We propose a prediction market as a form of forecasting future demand for electricity. We describe how to implement a simple prediction market for continuous variables, using only contracts based on binary variables. We also discuss specific issues concerning the implementation of such a market.

Competition-Based Environmental Policy: An Analysis Of Farmland Preservation In Maryland, John K. Horowitz, Lori Lynch, Andrew J. Stocking

Andrew J Stocking

Policy makers have turned to competition-based voluntary-enrollment programs as a cost-effective way to achieve preferred land uses. This paper studies bidder behavior in an innovative auction-based program in which farmers compete to sell and retire the right to develop their land. We derive a reduced-form bidding model that includes private and common values. This model allows us to estimate the role of bidder competition, winner’s curse correction, and the underlying distribution of private values. We estimate that the auction enrolled as many as 3,000 acres (12%) more than a take-it-or-leave-it offer would have enrolled for the same budgetary cost.

Charitable Memberships, Volunteering, And Discounts: Evidence From A Large-Scale Online Field Experiment, Andreas Lange, Andrew J. Stocking

Andrew J Stocking

Despite the increasing use by charities, significant uncertainty exists about optimal online fundraising mechanisms, especially when large donor pools show substantial heterogeneities. We use an online natural field experiment with over 700,000 subjects to test theory on price discounts and show large differences in donation behavior between donors who have previously given money and/or volunteered. For example, framing the charity’s membership price as a discount increases response rates and decreases conditional contributions from former volunteers, but not from past money donors. Our study thereby demonstrates the importance of conditioning fundraising strategies on the specifics of past donation dimensions.

A Two-Sided Auction For Legacy Loans, Peter Cramton

Peter Cramton

On Monday, 23 March 2009, Treasury Secretary Geithner presented the Public-Private Investment Program as a key instrument to resolve the financial crisis (www.financialstability.gov). The Treasury’s description still leaves many issues unanswered. We flesh out the auction design for legacy loans. A two-sided auction is required. Both banks and private investors must compete in a transparent and competitive process.

Foreword To Ross Baldick's 'Single Clearing Price In Electricity Markets', Peter Cramton

Peter Cramton

Argues that consumers and suppliers are better off with the clearing-price auction in electricity markets.

Bringing Growth Theory Down To Earth, Andrew J. Stocking, Ramon Lopez

Andrew J Stocking

Explicitly accounting for certain basic physical laws governing the “earth” sector dramatically enriches our ability to explain a high degree of diversity in observed patterns of economic growth. We provide a theoretical explanation of why some countries have been able to sustain a more or less constant and positive rate of economic growth for many decades while so many others have failed to do so. The analysis predicts that countries that have an over abundance of physical capital (a concept that is precisely defined in the text) may be unable to sustain a positive rate of economic growth over the …

Enabling Environments For Social Enterprise Development. Analytical Framework And International Exploratory Study Of Good Practices, Raf Peels, Caroline Gijselinckx, Wim Van Opstal, Li Zhao

Wim Van Opstal

The ILO Social Enterprise Development Targeting Unemployed Youth in South Africa (SETYSA) project seeks to promote social enterprise development in South Africa by supporting progress towards a conducive enabling environment and the development of appropriate business development service (BDS) products for potential social entrepreneurs, with a particular focus on young entrepreneurs. The ultimate objective of the project is to encourage the creation of employment opportunities within social enterprises, as well as the social value delivered by the goods and services they produce.

This report presents a selection of policy measures that governments worldwide are taking to create a supportive environment …

Een Monitor Voor De Sociale Inschakelingseconomie In Vlaanderen. Methodologierapport., Eva Deraedt, Wim Van Opstal

Wim Van Opstal

Dit rapport beschrijft de gehanteerde methodologie bij het opstellen van een monitoringinstrument dat ontwikkeld werd om de sociale inschakelingseconomie in Vlaanderen in kaart te brengen (Deraedt & Van Opstal, 2009). De ontwikkeling van dit instrument vond plaats aan het HIVA (K.U.Leuven), kadert in de onderzoekswerkzaamheden van het Steunpunt Werk en Sociale Economie en werd uitgevoerd in opdracht van de Vlaamse administratie. De opdracht bestond erin bestaande databanken maximaal te valoriseren om zo het veelkleurige pallet van de sociale inschakelingseconomie in kaart te brengen. Het uiteindelijke resultaat levert ons de nodige indicatoren op om een profielschets te kunnen maken van de …

Een Monitor Voor De Sociale Inschakelingseconomie In Vlaanderen. Resultatenrapport., Eva Deraedt, Wim Van Opstal

Wim Van Opstal

Dit rapport toont de resultaten van een monitoring- instrument dat ontwikkeld werd om de sociale inschakelingseconomie in Vlaanderen in kaart te brengen. De ontwikkeling van dit instrument vond plaats aan het HIVA (K.U.Leuven), kadert in de onderzoekswerkzaamheden van het Steunpunt Werk en Sociale Economie en werd uitgevoerd in opdracht van de Vlaamse administratie. De opdracht bestond erin bestaande databanken maximaal te valoriseren om zo het veelkleurige pallet van de sociale inschakelingseconomie in kaart te brengen.

Het uiteindelijke resultaat levert ons de nodige indicatoren op om een profielschets te kunnen maken van de ondernemingen die actief zijn in de sociale inschakelingseconomie, …

How Best To Auction Natural Resources, Peter Cramton

Peter Cramton

I study the design of auctions of natural resources, such as oil or mineral rights. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The structure of bidder preferences and the degree of competition are key factors in determining the best design. With weak competition and additive values, a simultaneous first-price sealed-bid auction may suffice. With more complex value structures, a dynamic auction with package bids, such as the clock-proxy auction, likely is needed to promote the efficiency and revenue objectives. Bidding on production shares, rather than bonuses, typically increases government take …

Auctioning The Digital Dividend, Peter Cramton

Peter Cramton

I begin by describing some of the problems of the simultaneous ascending auction. Then I present the package clock auction, which retains the benefits, while addressing the weaknesses, of the simultaneous ascending auction. I emphasize two essential elements of the package clock auction: the pricing rule and the activity rule. Along the way, I summarize both experimental and field results with the package clock auction.