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Articles 1 - 6 of 6
Full-Text Articles in Behavioral Economics
Prediction Markets To Forecast Electricity Demand, Peter Cramton, Luciano De Castro
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
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.
A Two-Sided Auction For Legacy Loans, Peter Cramton
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
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.
How Best To Auction Natural Resources, Peter Cramton
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
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.