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Author: Juan Francisco Fung
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Languages : en
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Author: Juan Francisco Fung
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Languages : en
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Author: Lucien Frys
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Languages : en
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Author: Deddy Priatmodjo Koesrindartoto
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Languages : en
Pages : 346
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Three papers in this dissertation are entirely self-contained. The papers are linked both through the methodologies used and through the issues addressed. Each of the paper seeks to understand the complexity effects of market design issues by using agent-based computational economic approach. The first essay addresses the question of which auction pricing rule should Treasury use that yields the highest revenue, especially whether the Treasury should use a discriminatory-price rule or a uniform-price one. Computational experiments are carefully designed based on four treatment factors: (1) the buyers' learning representation; (2) the number of buyers participating in the auction; (3) the total security demand capacity of buyers relative to the Treasury offered security supply (4) volatility of security prices in the secondary market. Key findings in this study show that Treasury revenue varies systematically with changes of treatments factor. The second essay tries to answer the question of what is the best bidding rule for multi-unit sealed-bid double auctions. Extending the earlier theoretical work which suggested that submitting supply offers in the form of price-quantity supply functions P(Q) will benefit the seller under one-sided auction with uncertain demand. However, this study results show that under double-sided multi-unit auction in which seller face a similar uncertain demand, submitting P(Q) supply offers not necessarily benefited sellers. Moreover, strategic interaction effects among players using P(Q) rules can lower sellers profit and overall market efficiency. Such insights are critical, especially to market designers who are concerned about the detailed aspects of market design implementation. The third essay addresses the experimental testing of the recently proposed wholesale power market design by Federal Energy Regulatory Commission. This Wholesale Power Market Platform (WPMP) is a complex market that requires market participants to simultaneously bid into real-time, day-ahead, ancillary, and transmission rights markets. The study main goals are to gain understanding the nature of this complex market design, at the same time to test whether WPMP design results in efficient, fair, robust market operations overtime, especially under conditions in which participants' strive to gain market power through strategic pricing, capacity withholding, and any other imaginable strategies.
Author: Nir Vulkan
Publisher: OUP Oxford
ISBN: 0191668435
Category : Business & Economics
Languages : en
Pages : 706
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Economists often look at markets as given, and try to make predictions about who will do what and what will happen in these markets. Market design, by contrast, does not take markets as given; instead, it combines insights from economic and game theory together with common sense and lessons learned from empirical work and experimental analysis to aid in the design and implementation of actual markets In recent years the field has grown dramatically, partially because of the successful wave of spectrum auctions in the US and in Europe, which have been designed by a number of prominent economists, and partially because of the increase use of the Internet as the platform over which markets are designed and run There is now a large number of applications and a growing theoretical literature. The Handbook of Market Design brings together the latest research from leading experts to provide a comprehensive description of applied market design over the last two decades In particular, it surveys matching markets: environments where there is a need to match large two-sided populations to one another, such as medical residents and hospitals, law clerks and judges, or patients and kidney donors It also examines a number of applications related to electronic markets, e-commerce, and the effect of the Internet on competition between exchanges.
Author: Kentaro Tomoeda
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Languages : en
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This thesis consists of three essays on mechanism and market design.
Author: Maxwell Harrison Stoller Allman
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Languages : en
Pages : 0
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This dissertation is a collection of three essays, each studying a market design setting where the exchange of money is not allowed. There are many real world markets where the exchange of money is considered either legally or ethically unacceptable, such the allocation of school seats, donor organs, or subsidized housing. For these kinds of markets, the market designer must use other strategies to influence the behavior of the participants and affect the outcomes of the market. Each of the three chapters analyzes how the rules of a given kind of market will affect the welfare of the participants along dimensions such as efficiency, fairness and diversity. Chapters one and two study theoretical models, the first is a model of one-sided assignment where a set of items is being allocated to a set of participants, and the second is a model of two-sided matching where doctors and hospitals first interview to learn more about their preferences before being matched. Chapter three describes an applied project where we leveraged the theoretical and empirical literature on school choice to help redesign the student assignment policy in the San Francisco Unified School district (SFUSD).
Author: Jin Kim
Publisher:
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Category :
Languages : en
Pages : 222
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Author: Akhilendra Vohra
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Languages : en
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This dissertation consists of three chapters in microeconomic theory, with a particular focus on market design and information economics. The papers develop and study applied theoretical models in order to: 1) Identify the unintended welfare effects of interventions in various markets and improve their design. 2) Understand how strategic actors take advantage of information revelation processes. The first chapter looks at the effect of wage caps on collective bargaining in the world of professional sports. Professional sports in the United States generate over 35 billion dollars yearly in revenue, which is divided between players and owners via collective bargaining. Given the stakes, some leagues instituted maximum contracts, limiting individual compensation to a percentage of team salary caps. Combining a model of a sports league with one of bargaining, I demonstrate that while these contracts limit salaries of star players, they can increase the welfare of all players. Maximum contracts reduce earning inequality and harmonize players' interests, improving collective bargaining power. The model highlights the welfare gains to be had if a heterogeneous group agrees to concessions that increase the alignment of their individual interests. My second chapter studies strategic targeting over networks. Persuaders, such as advertisers and political parties, expend vast resources targeting agents who amplify the persuaders' messages through their social network. Who should they target? To answer this, I develop a model of targeting on a network where agent beliefs evolve via a DeGroot process permitting persistence of initial beliefs. As a result, each agent is identified by their centrality and initial belief. Persuaders that want to steer the average belief of the agents in a particular direction take into account both features. Absent competition, a persuader trades-off an agent's centrality with the dissimilarity of her belief from that of the agent. With competition, a persuader considers the distribution of agents' interactions with its competitors. When competition is intense, the incentive to deter one's rival dominates. Equilibria where persuaders target those with similar beliefs arise, increasing polarization. This is in contrast to the canonical model where persuaders care only about the fraction of impressions they generate. In that case, targeting is based entirely on agent centrality. The final chapter of my dissertation examines the phenomenon of market unraveling. Labor markets are said to unravel if the matches between workers and firms occur inefficiently early, based on limited information. I argue that a significant determinant of unraveling is the transparency of the secondary market, where firms can poach workers employed by other firms. I propose a model of interviewing and hiring that allows firms to hire on the secondary market as well as at the entry-level. Unraveling arises as a strategic decision by low-tier firms to prevent poaching. While early matching reduces the probability of hiring a high type worker, it prevents rivals from learning about the worker, making poaching difficult. As a result, unraveling can occur even in labor markets without a shortage of talent. When secondary markets are very transparent, unraveling disappears. However, the resulting matching is still inefficient due to the incentives of low-tier firms to communicate that they have not hired top-quality workers. Coordinating the timing of hiring does not mitigate the inefficiencies because firms continue to act strategically to prevent poaching.
Author: Urmee Khan
Publisher:
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Languages : en
Pages : 142
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This dissertation consists of three essays that apply both economic theory and econometric methods to understand design and dynamics of institutions. In particular, it studies how institutions aggregate information and deal with uncertainty and attempts to derive implications for optimal institution design. Here is a brief summary of the essays. In many economic, political and social situations where the environment changes in a random fashion necessitating costly action we face a choice of both the timing of the action as well as choosing the optimal action. In particular, if the stochastic environment possesses the property that the next environmental change becomes either more or less likely as more time passes since the last change (in other words the hazard rate of environmental change is not constant over time), then the timing of the action takes on special importance. In the first essay, joint with Maxwell B Stinchcombe, we model and solve a dynamic decision problem in a semi-Markov environment. We find that if the arrival times for state changes do not follow a memoryless process, time since the last observed change of state, in addition to the current state, becomes a crucial variable in the decision. We characterize the optimal policy and the optimal timing of executing that policy in the differentiable case by a set of first order conditions of a relatively simple form. They show that both in the case of increasing and decreasing hazard rates, the optimal response may be to wait before executing a policy change. The intuitive explanation of the result has to do with the fact that waiting reveals information about the likelihood of the next change occurring, hence waiting is valuable when actions are costly. This result helps shed new light on the structure of optimal decisions in many interesting problems of institution design, including the fact that constitutions often have built-in delay mechanisms to slow the pace of legislative change. Our model results could be used to characterize optimal timing rules for constitutional amendments. The paper also contributes to generalize the methodology of semi-Markov decision theory by formulating a dynamic programming set-up that looks to solve the timing-of-action problem whereas the existing literature looks to optimize over a much more limited set of policies where the action can only be taken at the instant when the state changes. In the second essay, we extend our research to situations, where the current choice of action influences the future path of the stochastic process, and apply it to the legal framework surrounding environmental issues, particularly to the 'Precautionary Principle' as applied to climate change legislation. We represent scientific uncertainty about environmental degradation using the concept of 'ambiguity' and show that ambiguity aversion generates a 'precautionary effect'. As a result, justification is provided for the Precautionary Principle that is different from the ones provided by expected utility theory. This essay serves both as an application of the general theoretical results derived in the first essay and also stands alone as an analysis of a substantive question about environmental law. Prediction markets have attracted public attention in recent years for making accurate predictions about election outcomes, product sales, film box office and myriad other variables of interest and many believe that they will soon become a very important decision support system in a wide variety of areas including governance, law and industry. For successful design of these markets, a thorough understanding of the theoretical and empirical foundations of such markets is necessary. But the information aggregation process in these markets is not fully understood yet. There remains a number of open questions. The third essay, joint with Robert Lieli, attempts to analyze the direction and timing of information flow between prices, polls, and media coverage of events traded on prediction markets. Specifically, we examine the race between Barack Obama and Hillary Clinton in the 2008 Democratic primaries for presidential nomination. Substantively, we ask the following question: (i) Do prediction market prices have information that is not reflected in viii contemporaneous polls and media stories? (ii) Conversely, do prices react to information that appears to be news for pollsters or is prominently featured by the media? Quantitatively, we construct time series variables that reflect the "pollster's surprise" in each primary election, measured as the difference between actual vote share and vote share predicted by the latest poll before the primary, as well as indices that describe the extent of media coverage received by the candidates. We carry out Granger Causality tests between the day-to-day percentage change in the price of the "Obama wins nomination" security and these information variables. Some key results from our exercise can be summarized as follows. There seems to be mutual (two-way) Granger causality between prediction market prices and the surprise element in the primaries. There is also evidence of one-way Granger causality in the short run from price changes towards media news indices. These results suggest that prediction market prices anticipate at least some of the discrepancy between the actual outcome and the latest round of polls before the election. Nevertheless, prices also seem to be driven partly by election results, suggesting that there is an element of the pollster's surprise that is genuine news for the market as well.
Author: Tim Brühn
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Languages : en
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