Economics Commons^™

First Price Auctions With General Information Structures: Implications For Bidding And Revenue, Dirk Bergemann, Benjamin Brooks, Stephen Morris

Cowles Foundation Discussion Papers

This paper explores the consequences of information in sealed bid first price auctions. For a given symmetric and arbitrarily correlated prior distribution over valuations, we characterize the set of possible outcomes that can arise in a Bayesian equilibrium for some information structure. In particular, we characterize maximum and minimum revenue across all information structures when bidders may not know their own values, and maximum revenue when they do know their values. Revenue is maximized when buyers know who has the highest valuation, but the highest valuation buyer has partial information about others’ values. Revenue is minimized when buyers are uncertain …

Information And Market Power, Dirk Bergemann, Tibor Heumann, Stephen Morris

Cowles Foundation Discussion Papers

We analyze demand function competition with a finite number of agents and private information. We show that the nature of the private information determines the market power of the agents and thus price and volume of equilibrium trade. We establish our results by providing a characterization of the set of all joint distributions over demands and payoff states that can arise in equilibrium under any information structure. In demand function competition, the agents condition their demand on the endogenous information contained in the price. We compare the set of feasible outcomes under demand function to the feasible outcomes under Cournot …

The Attitude Of Egyptian Set Academics Towards Innovation: Universities And Innovation In A Factor-Driven Economy, Hala Elhadidi, David A. Kirby

Business Administration

In the modern knowledge economy universities are being required to operate more entrepreneurially, commercializing the results of their research and spinning out new ventures. The literature on the Triple Helix model (of academic–industry–government relations) is outlined, emphasizing – as does the model – the enhanced role that the modern entrepreneurial university plays in technological innovation. The study then examines the situation in Egypt where, as an earlier study demonstrated, innovation and the role of higher education in the innovation process are only weakly developed. Four hundred science, engineering and technology academics from eight of Egypt’s private and public universities were …

Information And Market Power, Dirk Bergemann, Tibor Heumann, Stephen Morris

Cowles Foundation Discussion Papers

We consider demand function competition with a finite number of agents and private information. We analyze how the structure of the private information shapes the market power of each agent and the price volatility. We show that any degree of market power can arise in the unique equilibrium under an information structure that is arbitrarily close to complete information. In particular, regardless of the number of agents and the correlation of payoff shocks, market power may be arbitrarily close to zero (so we obtain the competitive outcome) or arbitrarily large (so there is no trade in equilibrium). By contrast, price …

First Price Auctions With General Information Structures: Implications For Bidding And Revenue, Dirk Bergemann, Benjamin Brooks, Stephen Morris

Cowles Foundation Discussion Papers

We explore the impact of private information in sealed bid first price auctions. For a given symmetric and arbitrarily correlated prior distribution over values, we characterize the lowest winning bid distribution that can arise across all information structures and equilibria. The information and equilibrium attaining this minimum leave bidders uncertain whether they will win or lose and indifferent between their equilibrium bids and all higher bids. Our results provide lower bounds for bids and revenue with asymmetric distributions over values. We report further analytic and computational characterizations of revenue and bidder surplus including upper bounds on revenue. Our work has …

First Price Auctions With General Information Structures: Implications For Bidding And Revenue, Dirk Bergemann, Benjamin Brooks, Stephen Morris

Cowles Foundation Discussion Papers

We explore the impact of private information in sealed-bid first-price auctions. For a given symmetric and arbitrarily correlated prior distribution over values, we characterize the lowest winning-bid distribution that can arise across all information structures and equilibria. The information and equilibrium attaining this minimum leave bidders indifferent between their equilibrium bids and all higher bids. Our results provide lower bounds for bids and revenue with asymmetric distributions over values. We report further analytic and computational characterizations of revenue and bidder surplus including upper bounds on revenue. Our work has implications for the identification of value distributions from data on winning …

Identification In Differentiated Products Markets, Steven T. Berry, Philip A. Haile

Cowles Foundation Discussion Papers

Empirical models of demand for — and, often, supply of — differentiated products are widely used in practice, typically employing parametric functional forms and distributions of consumer heterogeneity. We review some recent work studying identification in a broad class of such models. This work shows that parametric functional forms and distributional assumptions are not essential for identification. Rather, identification relies primarily on the standard requirement that instruments be available for the endogenous variables — here, typically, prices and quantities. We discuss the kinds of instruments needed for identification and how the reliance on instruments can be reduced by nonparametric functional …

Team Production, Endogenous Learning About Abilities And Career Concerns, Evangelia Chalioti

Cowles Foundation Discussion Papers

This paper studies career concerns in teams where the support a worker receives depends on fellow team members’ effort and ability. In this setting, by exerting effort and providing support, a worker can influence her own and her teammates’ performances in order to bias the learning process in her favor. To manipulate the market’s assessments, we argue that in equilibrium, a worker has incentives to help or even sabotage her colleagues in order to signal that she is of higher ability. In a multiperiod stationary framework, we show that the stationary level of work effort is above and help effort …

Assessing The Probability Of Bankruptcy, Jarom Heaps

All Graduate Plan B and other Reports, Spring 1920 to Spring 2023

Knowing whether or not a company is financial stable has always been a top concern for analysts and money managers. This paper compares the effectiveness of default prediction using two different types of measures: accounting and market based. Accounting measures have been the most popular even though, according to theory, a market based measure reflects all available information. Theory goes as far to say that accounting measures can add no incremental value to a market based measure. In my research I found that accounting based measures can be effective in their predictive power; the market-based measure (BSM) results were much …

Physical Activity, Present Bias, And Habit Formation: Theory And Evidence From Longitudinal Data, Brad R. Humphreys, Jane E. Ruseski, Li Zhou

Economics Faculty Working Papers Series

We investigate temporal decisions to participate in exercise in a dynamic model featuring present bias and habit formation. The model highlights naivete about present bias and projection bias about habit formation/decay and implies that promoting participation in physical activity must both encourage the inactive to start and discourage the active from quitting as behavioral biases apply to both. Our empirical analysis using data from the British Household Panel Survey (BHPS) develops evidence consistent with predictions about present bias and habit formation/decay and an interesting asymmetry between starting and quitting that furthers understanding of existing empirical evidence.

The Renter Effect Part 2: Evidence, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

An Analysis Of Airline Quality Rating Components Using Bayesian Methods, John H. Mott, Branden K. Avery

International Journal of Aviation, Aeronautics, and Aerospace

The Airline Quality Rating, a unique metric that is of interval scale and is comparable across carriers and time periods, is a quantitative evaluation of the quality of U.S. domestic air carriers based on data that is collected and published by the U.S. Bureau of Transportation Statistics. One may gain insight into the relationship of the AQR metric to the carriers to which it is applied by grouping those carriers and examining the effects of the resulting groupings on the four individual factors that comprise the AQR. This study used Bayesian hierarchical modeling techniques to examine the differences between three …

The Promise Of Worker Training: New Insights Into The Effects Of Government Funded Training Programs, M. Jared Mcentaffer

College of Business: Dissertations, Theses, and Student Research

Using data on worker training programs in South Dakota over the years 2002 – 11, this study estimates the employment and earnings effects of occupational skills training and on-the-job training. Average treatment effects for the first and third calendar quarters after training are reported by: gender, worker type, demographic group, region of residence, and time period of job loss.

Both occupational skills training and on-the-job training effectively increased the employment rates and incomes of participants. The effectiveness of occupational skills training tended to grow as time passed, but the effectiveness of on-the-job training tended to fade over time. Three calendar …

Referrals: Peer Screening And Enforcement In A Consumer Credit Field Experiment, Gharad Bryan, Dean Karlan, Jonathan Zinman

Dartmouth Scholarship

Empirical evidence on peer intermediation lags behind both theory and practice in which lenders use peers to mitigate adverse selection and moral hazard. Using a referral incentive under individual liability, we develop a two-stage field experiment that permits separate identification of peer screening and enforcement. Our key contribution is to allow for borrower heterogeneity in both ex ante repayment type and ex post susceptibility to social pressure. Our method allows identification of selection on repayment likelihood, selection on susceptibility to social pressure, and loan enforcement. Implementing our method in South Africa we find no evidence of screening but large enforcement …

Current Account And Real Exchange Rate Dynamics In Indonesia, Firman Mochtar, Yoga Affandi

Economics and Finance in Indonesia

We analyze the role of both permanent and temporary factors in affecting the Indonesian current account and real exchange dynamics before and after 2000. Adopting Lee and Chinn (1998; 2006) approach as well as Chinn et al. (2007), two results stand out. First, we confirm that the behavior of the real exchange rate has altered since 2000. Identifications show that permanent shocks are the primary causes for the movements of the real exchange rate after 2000, while in the period before 2000, the Indonesian real exchange rates changes are characterized by greater dominance of temporary shocks. The apparent change in …

Improving Human Capital Through Better Education To Support Indonesia's Economic Development, Latif Adam, Siwage Dharma Negara

Economics and Finance in Indonesia

Despite Indonesia's impressive economic growth, it still lags behind other countries with a similar income level in terms of the quality of its human capital. This paper argues that one key factor explaining this low quality of human capital relates to the lack of focus and clear strategies to develop its education system. This paper attempts to assess Indonesia's current state of human capital development with particular focus on it's education sector. In order to benefit from its demographic bonus, Indonesia needs to to improve its current education and skill training system. Better education and skill training system will support …

Rural Electrification Program In Indonesia: Comparing Sehen And Shs Program, Maxensius Tri Sambodo

Economics and Finance in Indonesia

In 2014, the Indonesian government has targets to obtain 80% of electrification ratio and 98.9% of rural electrification ratio. Extending the grid and off-grid connection has been done to obtain the targets. This paper aims to compare two main programs on rural electrification namely Super Extra Energy Saving (Super Ekstra Hemat Energi, SEHEN) that is belong to PLN (state owned company in electricity) and the Solar Home System (SHS) that is financed by the Ministry of Energy and Mineral Resources (MEMR). Indonesia has started the rural electrification program in the late 1950s, but how to provide electricity in a sustainable …

Revisiting Stock Market Integration Pre-Post Subprime Mortgage Crisis: Insight From Bric Countries, Rayenda Brahmana, Chin-Hong Puah, Kai-Hung Wong

Economics and Finance in Indonesia

This study revisits the long-run relationships and short-run dynamic causal linkages among BRIC stock market, with the particular attention to the 2008 subprime mortgage crisis. Extending related empirical studies, comparative analyses of pre-crisis, and post-crisis periods were conducted to comprehensively evaluate how stock market integration was affected by financial crises. In general, after employing cointegration test and VAR test, the results reveal the increase of stock market integration in BRICs after the subprime crisis. The evidence also found that China stock market is the most influential among the BRICs, in which China stock market has the ability to Granger cause …

"Does Inflation Targeting Framework Make A Significant Difference In Lowering Price Level?" What Is Its Implication To Indonesia's Inflation Rate?, Faisal Rachman

Economics and Finance in Indonesia

In the last two decades many countries have been starting to employ Inflation Targeting Framework (ITF) as their main monetary policy framework. This is done to achieve an objective of anchoring public expectation on inflation which in the end will steer the price level movement towards ITF's ultimate target of relatively low and stable inflation rate. By conducting Difference-in-Difference method on panel data consisting of five countries implementing ITF since 2001 and twenty-one selected non-ITF countries for period 1990-2010, it is statistically proved that ITF adoption has a significant effect on inflation. In case of Indonesia, through Structural Break approach, …

Women, Higher Education, And The Labor Market: A Cross-Cultural Understanding Of The Impact Of Religion, Allison Fife Hale

Undergraduate Honors Capstone Projects

How do deeply-held cultural perspectives shape the desire and ability of women to pursue higher education and or careers? More specifically, how do predominant religious and cultural perspectives on the family, the role of women, and the role of education influence a woman's decision to obtain higher education and her perceived ability or desire to seek full-time employment upon graduation? To answer these questions, this research utilized a cross-cultural survey instrument to compare and contrast the perceptions of female, undergraduate students in one predominantly Muslim/Middle Eastern society -- Dubai, U.A.E -- and one predominantly Mormon/Western society -- Utah, U.S.A. We …

Does Education Increase Pro-Environmental Behavior? Evidence From Europe, Andrew G. Meyer

Economics Faculty Research and Publications

It is often observed that individuals with higher education levels tend to be more environmentally friendly. Yet, the causal evidence is lacking because there may well be omitted variables that cause individuals to attain more education and also cause individuals to be environmentally conscious. We implement a regression discontinuity design to estimate the increase in educational attainment due to changes in compulsory education laws in 20th century Europe. This allows us to overcome the identification problem of endogenous educational attainment. Using two waves of Eurobarometer surveys, we find a positive local average treatment effect for 7 of the 8 pro-environmental …

How Much Is Your Home Worth? Essays On Housing Value And Its Determinants, Anne Anders

All Dissertations

This first chapter uses neighborhood vacancies as a proxy for foreclosures and examines their impact on the value of surrounding neighborhood properties.

Often, the negative spillover of a foreclosure results from decay of the foreclosed property. Existence of a foreclosure within a neighborhood is proxied for by a vacant structure within 300 feet of the observed unit, resulting in a lower bound foreclosure externality.

Using the special neighbor sample of the American Housing Sample waves 1985, 1989 and 1993, small neighborhoods are observed and categorized into racially different neighborhoods (black, integrated or white neighborhood). Additionally, neighborhood-specific averages are constructed, such …

(Wp 2015-03) Lawson On Veblen On Social Ontology, John B. Davis

Economics Working Papers

This paper discusses Lawson’s use of Veblen’s concept of ‘neoclassical economics’ and argument that the category of neoclassical economics should be jettisoned on the grounds that it obfuscates effective critique of mainstream economics. The paper links Lawson’s critique of closed systems and Veblen’s cumulative causation view by offering a reflexivity, feedback loop formulation of the latter aimed at overcoming the pre-Socratic dichotomy between Heraclitian and Parmenidean ontological thinking. The paper then reviews what this implies for three key social ontology doctrines: social reality as processual and highly transient; emergence and the appearance of novelty; the internal relatedness of social reality. …

The Effects Of Nafta On Consumption, Income, And Employment, Warren Mills

Theses and Dissertations

A significant amount of concern exists in popular and political culture concerning the effects of trade liberalization on the domestic economy in the U.S. Difficulty exists in isolating the effects of a particular trade agreement due to unrelated trade policy changes that happen preceding, during, and following the signing of an agreement. This research seeks to do an analysis of the big picture involving consumption, income, and employment not with the intent of determining causation, which has proven highly problematic in previous research; instead, the focus is on whether we can exclude a negative effect by NAFTA on these measures …

The Effect Of Florida’S Timeshare Resale Accountability Act And Securitization Announcements On Vacation Ownership Shareholder Wealth, James R. Drake, Iii

UNLV Theses, Dissertations, Professional Papers, and Capstones

The focus of this study deals with the vacation ownership, or timeshare, industry, and is two-fold. First, it examines the passage of a criminal law in Florida that deals with the resale of timeshare properties and measures the law’s effects on the timeshare industry in terms of shareholder wealth. Second, the study examines the effect of the announcement of the sale of asset-backed securities in the timeshare industry, also in terms of shareholder wealth. The cumulative abnormal returns of publicly traded lodging corporations that operate in the timeshare industry are calculated and analyzed for both studies.

The passage of Florida’s …

Three Essays In Trade And International Development, Nii Amon Neequaye

All Graduate Theses and Dissertations, Spring 1920 to Summer 2023

This dissertation studies how society views corruption at different stages of economic development. It develops a theoretical framework that shows that at low levels of income or development, corruption increases and at high levels of income and development, corruption decreases. This theoretical proposition is also investigated empirically. The empirical analyses support the proposed theory and hint that fiscal policy, socioeconomic conditions, and incidences of war play significant roles in determining a country’s corruption level.

In addition, this dissertation also explores the relationship between merchandise and service trade. I show theoretically that the two are related and determined simultaneously. An empirical …

Singapore’S Housing Policies: Responding To The Challenges Of Economic Transitions, Sock Yong Phang

Research Collection School Of Economics

Singapore has developed its own unique state-driven housing system, with more than three quarters of its housing stock built by the Housing and Development Board and homeownership financed through Central Provident Fund savings. As a result, it has one of the highest homeownership rates amongst market economies. This paper provides a historical perspective of the main housing problems faced by successive prime ministers and their respective policy responses. Under the leadership of Prime Minister Lee Kuan Yew (1959-1990), the government established an integrated landhousing supply and housing finance framework to channel much needed resources into the housing sector to deal …

The Role Of The State In Singapore: Pragmatism In Pursuit Of Growth, Kim Song Tan, Manu Bhaskaran

Research Collection School Of Economics

This paper looks at how government intervention shapes the evolution of the Singapore economy and accounts for its successes and failures over the past 50 years. Compared with other dynamic Asian economies, the Singapore government's approach to intervene in the economy is both more extensive and more intrusive, but with a narrow focus on GDP growth and surplus accumulation as the primary objectives. The ruling government's near complete dominance in politics has enabled it to mobilize resources to create the preconditions for strong GDP growth and high savings. But the impact on the broader development of the economy and the …

Signaling In Online Credit Markets, Kei Kawai, Ken Onishi, Kosuke Uetake

Research Collection School Of Economics

We study how signaling affects equilibrium outcomes and welfare in markets with adverse selection. Using data from an online credit market, we estimate a model of borrowers and lenders where low reserve interest rates can signal low default risk. Comparing a market with and without signaling relative to the benchmark case with no asymmetric information, we find that adverse selection destroys as much as 16% of total surplus, up to 95% of which can be restored with signaling. We also find the credit supply curves to be backward-bending for some markets, consistent with the prediction of Stiglitz and Weiss (1981).

Matlab And Python Functions For Weighted Disaggregation, Amir Borges Ferreira Neto, Randall Jackson

Regional Research Institute Technical Documents

This technical document describes a weighted disaggregation problem and provides the code for a function in MATLAB and Python to perform such disaggregation.