Multi-unit ascending auctions allow for equilibria in which bidders strategically reduce their demand and split the market at low prices. At the same time, they allow for preemptive bidding by incumbent bidders in a coordinated attempt to exclude entrants fromnthe market. We consider an environment where both demand reduction and preemptivenbidding are supported as equilibrium phenomena of the ascending auction. In a series of experiments, we compare its performance to that of the discriminatory auction. Strategic demand reduction is quite prevalent in the ascending auction even when entry imposes a (large) negative externality on incumbents. As a result, the ascending auction performsnworse than the discriminatory auction both in terms of revenue and efficiency, while entrants.chances are similar across the two formats.
The N-firm Cournot model with general technologies is reviewed to derive generalized and unified conditions for existence of a pure strategy Nash equilibrium. Tight conditions are formulated alternatively (i) in terms of concavity of two-sided transforms of inverse demand, or (ii) as linear constraintsnon the elasticities of inverse demand and its first derivative. These conditions hold, in particular, if a firm’s marginal revenue decreases in other firms’ aggregate output, or if inverse demand is logconcave. The analysis relies on lattice-theoretic methods, engaging both cardinal and ordinal notions of supermodularity. As a byproduct, a powerful test for strict quasiconcavitynis obtained.
This note presents an algorithm that extends a binary choice model to choice among multiple alternatives. Both neoclassical microeconomic theory and Luce choice model are consistent with the proposed algorithm. The algorithm is compatible withnseveral empirical findings (asymmetric dominance and attraction effects) that cannot be explained within standard models.
This paper presents a simple conceptual framework intended for describing individuals'nsubjective evaluations of occupational wage inequality and their demand for redistribution. Most importantly, the framework explicitly allows for the distinction between individuals'nperceptions and their normative beliefs. I illustrate the framework using Swiss survey data from the International Social Survey Program. While most individuals accept quite large wage differentials across occupations, they also prefer a lower level of overall wage inequality than what they perceive to exist. Consistent with previous evidence, the empirical analysis also shows that financial self-interest, social norms about distributive justice and perceptions of how wages are determined in reality all simultaneously influence the demand for redistribution. Finally, I show that subjective inequality measures and the demand for redistribution are substantially significant predictors of both individuals' support for governmentnintervention and their party identification. This result provides indirect evidencenon the presumed link between perceptions and beliefs on the one hand and and politicalnoutcomes on the other hand.
Peer reviews and rankings today are the backbone of research governance, but recently came under scrutiny. They take explicitly or implicitly agency theory as a theoretical basis. The emerging psychological economics opens a new perspective. As scholarly research is a mainly curiosity driven endeavor, we include intrinsic motivation andnsupportive feedback by the peers as important determinants of scholarly behavior. We discuss whether a stronger emphasis on selection and socialization offers an alternative to the present regime of academic rankings.
This paper investigates how subjects determine minimum selling prices for lotteries. We design an experiment where subjects have at every moment an incentive to state their minimum selling price and to adjust the price if they believe that the price that they stated initially was not optimal. We observe frequent and sizeable price adjustments. We find that random pricing models can not explain the observed price patterns. We show that earlier prices contain information about future price adjustments. We propose a model of Stochastic Pricing that offers an intuitive explanation for these price adjustment patterns.
"Four types of “economics” relevant for institutional analysis are distinguished: Standard Neoclassical Economics; Socio-Economics or Social Economics; New Institutional Economics; and Psychological Economics (often misleadingly called Behavioural Economics). The paper argues that an extension of Neoclassical Economics with elements from other social sciences (including political science, sociology, psychology, law and anthropology) is fruitful to explain institutions because it allows us to maintain the strength ofnthat approach. Social Economics can play an important role helping to overcome the limitations of Neoclassics. However, it should become more concrete, integrate what is useful in Neoclassics, and should seriously engage in empirical research."
This paper argues that the “Economics of Crime” concentrates too much on punishment as a policy to fight crime, which is unwise for several reasons. There are important instances in which punishment simply cannot reduce crime. Several feasible alternatives to punishment exist, such as offering positive incentives or handing out awards for law abiding behavior. These alternative approaches tend to create a positive sum environment. When people appreciate living in a society that is to a large extent law abiding, they are more motivated to observe the law.
Gegenwärtig spielt sich in der Ökonomie eine beinahe revolutionäre Entwicklung ab. Die direkte empirische Erfassung des subjektiven Wohlbefindens fordert die traditionelle Ökonomie heraus, inspiriert sie zu neuen Einsichten und eröffnet neue Wege der wissenschaftlichen Forschung. Ansatz und Möglichkeiten der ökonomischen Analyse des Glücks werden aufgezeigt und anhand von zwei spezifischen Anwendungen illustriert. Der Zusammenhang zwischen Einkommen und Lebenszufriedenheit wird wesentlich durch Anspruchsniveaus, mit denen Lebensumstände beurteilt werden, bestimmt. Die Anspruchsniveaus bilden sich dabei über soziale Vergleiche und Gewöhnungsprozesse heraus. Der Lebenszufriedenheitsansatz wird als neue Methode zur Bewertung öffentlicher Güter präsentiert. Die kurze Diskussion der »Glückspolitik« aus einer konstitutionellen Perspektive legt eine vergleichende institutionelle Analyse des subjektiven Wohlbefindens nahe. Die Glücksrevolution in der Ökonomie steht erst am Anfang. Weitere Einsichten für die Suche nach den Institutionen, die den Menschen am besten erlauben, ihre Vorstellungen vom guten Leben zu verfolgen, sind in der Zukunft zu erwarten.
Using a two-sector endogenous growth model, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate cycles in output, consumption, investment and hours. To contextualize our findings, we also assess whether the human capital model or the standard real business cycle (RBC) model better explains the observed variation in these aggregates. We find that while neither of the workhorse growth models uniformly dominates the other across all variables and forecast horizons, the two-sector model provides a far better fit to the data. Some other key results are first, that Hicks-neutral shocks explain a greater share of output and consumption variation at shorter-forecast horizons whereas human capital productivity innovations dominate at longer ones. Second, the combined explanatory power of the two technology shocks in the human capital model is greater than the Hicks-neutral shock in the RBC model in the medium- and long-term for output and consumption. Finally, the RBC model outperforms the two-sector model with respect to explaining the observed variation in investment and hours.
