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Byline: Domenico Menicucci (1) Keywords: Multi-dimensional screening; multi-object auctions; bundling Abstract: We design the revenue-maximizing auction for two objects when each buyer has bi-dimensional private information and a superadditive utility function (i.e., a synergy is generated if a buyer wins both goods). In this setting the seller is likely to allocate the objects inefficiently with respect to an environment with no synergies (see Armstrong, RES (2000)). In particular, the objects may be bundled too rarely or a buyer may win the bundle even though her valuations for the goods are weakly dominated by the values of another buyer. Author Affiliation: (1) Dipartimento di Matematica per le Decisioni, Universita degli Studi di Firenze, Italy Article note: Received: 29 October 2001, Accepted: 29 October 2002, JEL Classification: This paper has been written while the author was a member of the Dipartimento di Statistica e Matematica Applicata alle Scienze Umane 'Diego De Castro', Universita degli Studi di Torino, Italy. Valuable comments and suggestions were provided by Antonio Cabrales, Massimo Marinacci, three anonymous referees and, especially, by Mark Armstrong. The usual disclaimer applies.

Byline: Quirino Paris (1), Michael R. Caputo (1) Keywords: Keywords:amoney-goods models, weak separability, Slutsky matrix, comparative statics.; JEL-classification: D11, E41. Abstract: The introduction of real-cash balances into the neoclassical model of the consumer wrecks havoc, in general, on the empirically observable refutable comparative statics properties of the model. We provide the most general solution of this problem to date by deriving a symmetric and negative semidefinite generalized Slutsky matrix that is empirically observable and which contains all other such comparative statics results as a special case. In addition, we clarify and correct two aspects of Samuelson and Sato's (1984) treatment of this problem. Author Affiliation: (1) Department of Agricultural and Resource Economics, University of California, One Shields Avenue, Davis, CA 95616-85121, USA (e-mails: paris@primal.ucdavis.edu caputo@primal.ucdavis.edu), US Article note: Received March 9, 2001 revised version received September 3, 2001

Byline: Monique Florenzano (1), Emma Moreno-Garcia (2) Keywords: JEL classification: D59, D49, D00, D11; Key words: Linear utilities, indirect utility function, Walrasian equilibrium, atomless economies Abstract: The purpose of this paper is to study how the equilibrium prices vary with respect to the initial endowments in a linear exchange economy with a continuum of agents. We first state the model and give conditions of an increasing strength for existence, uniqueness and continuity of equilibrium prices. Then, if we restrict ourselves to economies with essentially bounded initial endowments and if we assume that there is, from the point of view of preferences, only a finite number of types of agents, we show that, on an open dense subset of the space of initial endowments, the equilibrium price vector is an infinitely differentiable function of the initial endowments. The proof of this claim is based on a formula allowing to compute the equilibrium price vector around a so-called 'regular' endowment where it is known. Author Affiliation: (1) CNRS-CERMSEM, Universite de Paris 1, Boulevard de l'Hopital 112, 75647 Paris Cedex 13, France, FR (2) Departamento de Economia e Historia Economica, Facultad de Economia y Empresa, Universidad de Salamanca, Edificio F.E.S. Campus Miguel de Unamuno, 37007 Salamanca, Spain (e-mail: emmam@usal.es), ES

Byline: Richard A. Chechile (1), R. Duncan Luce (2) Keywords: generic utility theory; subjective equivalence of gambles; context-dependent utility scaling Abstract: Chechile and Cooke (1997) experimentally tested a broad class of utility models subsumed under the Miyamoto (1988, 1992) generic utility theory. The Chechile and Cooke study required participants to match on each trial, a fully specified reference gamble to a partially specified comparison gamble by adjusting the probability of a win on the comparison gamble. The Chechile and Cooke experiment, however, contained a subset of trials which were intrinsically unmatchable. In such cases, the participants could only give an extreme probability (either 0 or 1). In this paper, those extreme trials were omitted and the results from the experiment reanalyzed. Despite the mismatch problem, the conclusions of the Chechile and Cooke experiment were again supported. For nine implementations of generic utility there is model failure due to the systematic variation of a parameter that should be a constant. Author Affiliation: (1) Tufts University, Medford, Massachusetts (2) University of California, Irvine Article History: Registration Date: 28/09/2004

Byline: Christian S. Pedersen (1), Stephen E. Satchell (1) Keywords: inequality; risk; utility Abstract: Recalling the class of risk measures introduced by Stone [1973], the authors survey measures from different academic disciplines--including psychology, operations research, management science, economics, and finance--that have been introduced since 1973. We introduce a general class of risk measures that extends Stone's class to include these new measures. Finally, we give four axioms that describe necessary attributes of a good financial risk measure and show which of the measures surveyed satisfy these. We demonstrate that all measures that satisfy our axioms, as well as those that do not but are commonly used in finance, belong to our new generalized class. Author Affiliation: (1) Trinity College, Cambridge University, Cambridge, U.K, CB2 ITQ Article History: Registration Date: 13/10/2004

Byline: Mattias Lundback (1) Keywords: regulation; health care; principal-agent; hospital; agency Abstract: This article addresses the combined problem of imperfect agency and asymmetric information in the regulation of hospitals by modeling the physician as a utility maximizer with both the utility of patients and profit of the hospital as arguments in his or her utility function. The article concludes that optimal regulation of hospitals is based on three important factors: the doctor's marginal rate of substitution between profit of the hospital and utility of the patients, moral hazard in the relationship between the regulator and the hospital, and adverse selection in the same relation. Author Affiliation: (1) CEFOS, Goteborg University, Pilgatan 19A, S - 411 22, Goteborg, Sweden Article History: Registration Date: 29/09/2004