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The platform firm has emerged as an important site for the production of economic knowledge. This paper situates the work performed by a newly christened group of “tech economists” under the auspices of these firms within a larger history of economists’ engagement with information processing. Previously, those economists wishing to grapple with the computer would ally with the military, eventually leading them to accept an understanding of markets as purpose-built, algorithmic “person-machine systems.” Upon allying with the platform firm, economists would attune their understanding to the business model of their new patrons. This paper considers what this development augurs for the profession.

In March and December 2018, the Indian government auctioned two bundles of roads to monetize its assets using the Toll-Operate-Transfer (TOT) model. This paper focuses on understanding spatial distribution of monetized road assets for TOT I and II. Our hypothesis is that there are likely to be strategic reasons for the spatial distribution. The research design consists of comparative case studies of these two auctions. The data sources include in-depth interviews with bidders, government officials, and analysts as well as documentary analyses of concession agreements, bid documents, and other secondary data. It is found that road assets for TOT I were in “politically friendly” states with better asset quality to make them bankable and encourage private participation in future auctions. The bids were well above the reserve price. For TOT II, the assets were of lower quality and three highways out of eight in the auction bundle were in left-leaning opposition-controlled states. The reserve price was also higher, and unfortunately, the bids were too low, and the contract was not awarded.

Why do some incomplete information markets feature intermediaries while others do not? I study the allocation of two goods in an incomplete information setting with a single principal, multiple agents with unit demand, and interdependent valuations. I construct a novel dynamic mechanism implemented by a principal who faces a set of intermediaries, each of whom represents an ex ante identical set of agents. This mechanism has a unique (up to permutation) weak perfect Bayesian equilibrium. The dynamic mechanism is inefficient with positive probability. Nevertheless, under mild conditions the agents are ex ante better off under the dynamic mechanism relative to a Vickrey-like auction because the intermediaries are more able to exploit information asymmetries in the dynamic mechanism than agents are able to exploit information asymmetries in the Vickrey-like auction. Finally, I show that in large markets the dynamic mechanism and Vickrey-like auction have the same expected total surplus. The comparison between the two mechanisms gives a stylized intuition for the hierarchical structure of larger markets and institutions.

Reserve prices are used by sellers to modify the allocation induced by standard auctions. The existing literature has shown that, if the number of bidders is fixed, a reserve price can be used to increase expected revenues. This comes at the expense of efficiency when the auctioned good goes unsold. Instead, when the number of bidders is not fixed, a reserve price may discourage entry. The reduction in the number of bidders caused by the reserve price in this situation is detrimental for both revenues and efficiency. This work shows that a different conclusion may emerge when potential entrants arrive sequentially and face the risk of incurring losses conditional on winning the object on sale. In fact, we show that reserve prices may lead to more entry and raise the efficiency. Applications characterized by the presence of an incumbent who is better informed about some common characteristics of the object for sale may yield the type of features that are needed for our different conclusion to hold.

A Review of Joanna Grabski's Art World City Dak'Art, Biennale de l'Art Africain Contemporain, is built from within, not without, argues Joanna Grabski in Art World City: The Creative Economy [...]

We introduce a new class of matching mechanisms—quantile stable mechanisms—that generate stable matchings that can be seen as a compromise between sides of a two-sided market. We show that responsiveness is a sufficient condition for the existence of such mechanisms and that all such mechanisms are distinct. We also analyze the manipulability of these mechanisms by market participants.

Online advertising often involves targeting ads to certain types of consumers where ads are commonly sold by generalized second price auctions. However, such an auction or mechanism could be considered unfair if similar consumers are consistently shown different ads or consistently receive different payoffs. Results show that such ascending bid auctions may result in unfair treatment and additionally that uncertainty regarding an ad’s value can result in inefficiency. An alternative way to assign ads to consumers is presented called the random assignment mechanism. Results show that the random assignment can improve fairness while improving efficiency in some circumstances.

This paper estimates the price changes in global bluefin tuna (BFT) markets in response to shifts in regional and global landings to evaluate the conservation and economic incentives from changes in the Total Allowable Catch (TAC) managed by all three Regional Fisheries Management Organizations. A fisherman’s income, and thus the financial incentive to accept management measures controlling catch levels, depends in part on how responsive price is to overall catch. Individual fisherman, with their own best interest in mind, used to wish to increase their individual landings and create an incentive to ask to increase the TAC for the industry, without realizing the possible revenue loss due to the resulting falling prices. To protect the value of all stakeholders’ property rights, a consensus to avoid abruptly raising the TAC, without first considering the potential loss due to market response, is needed. Alternatively, if revenue increases with lower TAC, a positive economic incentive for conservation is created if price increasing proportionately more than the lower supply, with harvest profits boosted by lower costs of production. To capture the complexity of substituting across various sources of supply and product form, a general synthetic inverse demand system is estimated to identify the impact of overall landings on BFT prices. This system estimates price flexibilities of both fresh and frozen longline-caught sashimi-grade tunas (Pacific, Atlantic and southern bluefins, and bigeye) at the Tokyo Center Market in Japan, including the Tsukiji Market, the world’s largest fish auction market that served as the single global price leader for BFT. The resulting estimation shows that own-quantity price flexibilities of every type of fresh and frozen BFTs are less than unity and inflexible in their own consumption. This creates poor individual producer incentives for fishermen to reduce wild or farmed BFT supply, as there is a chance to increase their own revenue, under the unlikely condition that the total supply is fixed. However, by observing the rapid increases in the TAC of Eastern Atlantic bluefin tuna (EABFT) in the coming years, suppliers may not be better off as price will drop proportionally faster and total revenue if the estimated scale flexibility is greater than one. Based on the estimated scale flexibility of frozen BFT, which is slightly less than unity, the frozen subsector of EABFT suppliers is the only winner under the supply increases. Suppliers of frozen BFT in other regions, fresh BFT (in the Atlantic and elsewhere), and southern BFT and bigeye tuna will all be harmed through lower revenue by the supply increases. Additionally, while total revenue might stay the same for frozen BFT suppliers, fishermen will potentially receive lower profits due to higher operating costs associated with increased landings when the supply of EABFT increases. Given the number of sectors that ultimately lose financially in the short term and given the ecological (and production) risks accompanying an abrupt increase in fishing pressure in the long term, the global economic losses resulting from an increase in the allowable catch of Atlantic bluefin tuna will outweigh any potential increases to revenue. [ABSTRACT FROM AUTHOR]

Over the last few decades, the Internet has experienced tremendous growth in data traffic. This continuous growth due to the increase in the number of connected devices and platforms has dramatically boosted content consumption. However, retrieving content from the servers of Content Providers (CPs) can increase network traffic and incur high network delay and congestion. To address these challenges, we propose a joint deep learning and auction-based approach for congestion-aware caching in Named Data Networking (NDN), which aims to prevent congestion and minimize the content downloading delays. First, using recorded network traffic data on the Internet Service Provider (ISP) network, we propose a deep learning model to predict future traffic over transit links. Second, to prevent congestion and avoid high latency on transit links, which may experience congestion in the future; we propose a caching model that helps the ISP to cache content that has a high predicted future demand. Paid-content requires payment to be downloaded and cached. Therefore, we propose an auction mechanism to obtain paid-content at an optimal price. The simulation results show that our proposal prevents congestion and increases the profits of both ISPs and CPs. [ABSTRACT FROM AUTHOR]

In this study, we designed a delayed payment mechanism in laboratory second price auctions (SPAs), under which subjects received a cash endowment two weeks after the experiment day and had to use their own money to pay the experimental losses (if any) on the experiment day. We compared the effect of delayed payment on overbidding in the induced value SPAs with the conventional “on-the-spot” payment mechanism where the subjects received an endowment on the experiment day, and the prepaid mechanism where the subjects received the endowment two weeks before the experiment day. Each auction was repeated for 20 rounds to provide sufficient learning opportunities to the bidders. Our results showed that bids converged to the corresponding values over auction rounds and overbidding was reduced by previous losses, consistently with the adaptive learning theory. Moreover, overbidding seems to depend significantly on bidders’ cash holding, and the magnitude of the payment treatment effects depends crucially on liquidity constraints. In the presence of liquidity constraints, both delayed and prepaid payment mechanisms reduced overbidding, while in the absence of liquidity constraints, only the delayed endowment mechanism reduced overbidding. Furthermore, when controlling the degree of liquidity constraints, subjects with higher GPAs were less likely to overbid and the delayed endowment mechanism significantly reduced overbidding compared to other payment mechanisms. These results suggest that overbidding in SPAs might be caused by bounded rationality and could be reduced by adaptive learning especially when overbidding becomes “truly” costly to subjects. [ABSTRACT FROM AUTHOR]

In this note I show that the equilibrium in cutoff strategies observed in auctions with a buy-it-now price may also arise in markets where objects are sold simultaneously by auctions and posted prices. However, contrary to auctions with a buy-it-now price where buyers need to know only the total number of players in the market, in the latter environment buyers must also observe the number of active bidders in the auction for the equilibrium to exist in cutoff strategies.

Centralized markets are often considered more efficient than bilateral exchanges because information is public and the same for all the agents. On decentralized markets, where the information is private, the influence of trust on the market outcome has been underlined by many authors. We present an empirical study of the distinctive Boulogne-sur-Mer Fish Market (where both buyers and sellers can choose to trade by either bidding or bargaining), focused on the interactions between agents. Our approach is inspired by studies of mutualistic ecosystems, where the agents are of two different types (as in plant-pollinator networks) and the interactions only take place between agents of different kinds, naturally providing benefits to both. In our context, where the two kinds of agents are buyers and sellers, our study shows that not only do their interactions bring economic benefits for the agents directly involved, but they also contribute to the stability of the market. Our results help to explain the surprising coexistence of the two forms of market in the distinctive Boulogne sur Mer Fish Market. [ABSTRACT FROM AUTHOR]

Auctions, normally considered as devices facilitating trade, also provide a way to probe mechanisms governing one’s valuation of some good or action. One of the most intriguing phenomena in auction behavior is the winner’s curse — the strong tendency of participants to bid more than rational agent theory prescribes, often at a significant loss. The prevailing explanation suggests that humans have limited cognitive abilities that make estimating the correct bid difficult, if not impossible. Using a series of auction structures, we found that bidding approaches rational agent predictions when participants compete against a computer. However, the winner’s curse appears when participants compete against other humans, even when cognitive demands for the correct bidding strategy are removed. These results suggest the humans assign significant future value to victories over human but not over computer opponents even though such victories may incur immediate losses, and that this valuation anomaly is the origin of apparently irrational behavior.

The ultimate value of theories describing the fundamental mechanisms behind asset prices in financial systems is reflected in the capacity of such theories to understand these systems. Although the models that explain the various states of financial markets offer substantial evidence from the fields of finance, mathematics, and even physics, previous theories that attempt to address the complexities of financial markets in full have been inadequate. We propose an artificial double auction market as an agent-based model to study the origin of complex states in financial markets by characterizing important parameters with an investment strategy that can cover the dynamics of the financial market. The investment strategies of chartist traders in response to new market information should reduce market stability based on the price fluctuations of risky assets. However, fundamentalist traders strategically submit orders based on fundamental value and, thereby stabilize the market. We construct a continuous double auction market and find that the market is controlled by the proportion of chartists, Pc. We show that mimicking the real state of financial markets, which emerges in real financial systems, is given within the range Pc = 0.40 to Pc = 0.85; however, we show that mimicking the efficient market hypothesis state can be generated with values less than Pc = 0.40. In particular, we observe that mimicking a market collapse state is created with values greater than Pc = 0.85, at which point a liquidity shortage occurs, and the phase transition behavior is described at Pc = 0.85. [ABSTRACT FROM AUTHOR]

BACKGROUND AND OBJECTIVES: The long-term nature and capitalization of projects as well as the risks of the country's economic environment have made the provision of proper infrastructure as a permanent problem for national and local governments. Governments prefer to outsource the development and exploitation of capital assets to the private sector due to several reasons. In this matter, government institutions, due to their weaknesses in both technology and financing, are willing to create some optimal policy frameworks to utilize financial instruments to encourage private sector participation, as well as increase the share of revenues from the urban projects.The aim of this paper is to use the auction theory to improve the current mechanisms of public asset allocation. METHODS: This paper investigated the legal framework to design an allocation mechanism for the public assets using a qualitative approach. This qualitative method is based on the case study. This paper works on a series of library studies in order to analyze and familiarize with the problems, shortcomings, and inadequacies in the allocation of public assets exploitation plans in the Municipality of Tehran. FINDINGS: The obtained results indicate that the current rule can be improved in terms of choosing the process holding model, bidding criteria, and focusing on sharing future revenues in order to strengthen both the optimality and efficiency of outputs CONCLUSION: This paper proposed the bidding mechanisms that can be employed based on the current rules. After determining the qualifications of the contractors, a two-step model can be utilized to provide the set of assets. The mechanism of holding bidding was provided based on the results of previous researches as well as the features of the current rule in the form of two stages of price detection and the First Price Sealed Bid Auction mechanism.

Buyer-seller networks where price is determined by an ascending-bid auction are important in many economic examples such as certain real estate markets, radio spectrum sharing, and buyer-supplier networks. However, it may be that some sellers are better off not participating in the auction. We consider what happens if sellers can make a take it or leave it offer to one of their linked buyers before the auction takes place and thus such a seller can choose not to participate in the auction. We give conditions on the graph and buyers valuations under which the buyer and seller will both agree to such a take it or leave it offer. Specifically, the buyer-seller pair will choose private negotiation over the auction if the seller acts as a network bridge with power over the buyer and if there are enough buyers with low valuations so that the seller does not expect to receive a high price in the auction.

Two experimental treatments are used to study the effects of auction risk across five mechanisms. The first canonical, baseline treatment features only strategic risk and replicates the standard results that overbidding relative to the risk neutral Nash equilibrium is prevalent in all common auction mechanisms except for the English auction. We do not find evidence that bidders’ measured risk preferences can explain these patterns of overbidding. To enhance salience, we introduce a second novel treatment with external risk. This treatment captures the risk, prevalent in online auctions, that winners will not receive a good of value. We find that dynamic auctions—including the English—are particularly susceptible to overbidding in this environment. We note that overbidding is somewhat diminished in later periods and that our results may thus have particular relevance for bidders who are not highly experienced or who have not directly experienced losses. We conclude with a brief discussion of research implications.

Abstract: This paper surveys pricing mechanisms used by government agencies to manage congestion, as well as highlights the many political and social issues that have to be addressed in order to implement a pricing mechanism. This survey was undertaken in order to be able to understand how congestion pricing could be used to help manage airspace capacity. This is an important question since a 2008 analysis by the Joint Economic Committee of the US Congress suggested that domestic air traffic delays in 2007 cost the economy as much as $41 billion, including $19 billion in increased operational costs for the airlines and $12 billion worth of lost time for passengers. The paper begins by surveying roadway congestion approaches throughout the world. We survey the successes that peak pricing charges have had on reducing congestion. We also report the other benefits that such practices have had: improving the public transportation network, improving the economy of the region, reducing carbon emissions, and creating new urban living spaces. We next examine other applications of congestion pricing, including managing demand for canal and bridges passage, port usage, access to city centers, and peak use of energy resources. The paper ends with a proposal for a two-staged approach to the management of air space and runway congestion. The first stage imposes a service standard on runway access that is consistent with an airport's capacity during good weather days. Then, when weather reduces capacity either in the airspace or on runways, we propose a congestion pricing mechanism that charges flights based on the amount of congestion the flight imposes on the entire system. [Copyright &y& Elsevier]

We have studied simultaneous contests vis-a-vis a single contest. We have shown that "generally" it is better for a contest designer to design a single contest than simultaneous contests, when the cost and the performance functions of all the contestants are linear in effort. We have provided a case where abilities are uniformly distributed to strengthen the argument. [ABSTRACT FROM AUTHOR]

This article focuses on media ownership and spectrum auction design. These two issues have not only been particularly important at the Federal Communications Commission (FCC) over the last year, but also are being informed by economic analysis either completed at the FCC or commissioned by the FCC. [ABSTRACT FROM AUTHOR]

With increasing numbers of consumers in auction marketplaces, we highlight some recent approaches that bring additional economic, social, and psychological factors to bear on existing economic theory to better understand and explain consumers' behavior in auctions. We also highlight specific research streams that could contribute towards enriching existing economic models of bidding behavior in emerging market mechanisms. [ABSTRACT FROM AUTHOR]

This article provides information on several books tackling contrasting perspectives on the visual arts. The field sociology is absorbed in showing what is considered distinctive or even sacred about the fine arts, which is a product of routine, unexceptional social processes. The books under consideration, all involving the visual arts, can be compared in terms of how they exemplify the sociological practice of making normal the mysterious. Such a comparison reveals that a key operation in normalization is showing that artistic value is a social product. Drawing upon a wealth of observations and interviews in auction worlds that distribute paintings and antiques, thoroughbred horses and fish fresh from the North Atlantic, old cars and tobacco, Charles W. Smith, who wrote the book Auctions, suggests that for a surprising number of commodities, the economists have it backwards. Rather than value's determining price, it is price, produced by an auction community, that sets value. In cases where the value of typical items is inherently uncertain because of the articles' obscure past, obscure future, elusive component of genius, or wildly fluctuating production costs, a fixed-price system of exchange is likely to be replaced by private negotiations or, where potential buyers and sellers cannot even agree on a set of standards for evaluation, by an auction system.