Christopher Avery

Strategic Jump Bidding in English Auctions

This paper solves for equilibria of sequential bid (or English) auctions with affiliated values when jump bidding strategies may be employed to intimidate ones opponents. In these equilibria, jump bids serve as correlating devices which select asymmetric bidding functions to be played subsequently. Each possibility of jump bidding provides a Pareto improvement for the bidders from the symmetric equilibrium of a sealed bid, second-price auction. The expanded set of equilibria can approximate either first- or second-price outcomes and produce exactly the set of expected prices between those two bounds. These results contrast with standard conclusions that equate English and second-price auctions.

Recommender systems for evaluating computer messages

Free-riding leads to too few evaluations. Beyond this, evaluations will be provided by an unrepresentative group—those who most enjoy the evaluation process. Hence, their evaluations may be misleading. Free-riding implies neither sloth nor conscious selfinterested calculation; it can arise innocently. For instance, a newsgroup reader with the flu may not evaluate messages for several days. Upon return, that reader should find a set of the best messages as selected by other readers, and none of the worst. Such an experience would probably diminish the reader’s zeal to evaluate. Figure 1 shows payoffs for Example 1. There are two potential readers for a particular message that is equally likely to be either “good” or “bad.” A single evaluation is assumed to completely identify the value of the message. Table (b) is derived by calculating expected outcomes from section (a). For example, assume B reads. If A also reads immediately, her payoff is 10 if the message is good and -12 if it is bad, implying -1 on average. If A waits, she will read only if the message is good, yielding an expected payoff of 5. In Example 1, it would be optimal for one person to read immediately and the other to wait, giving a total payoff of 4. Unfortunately, reader B gains by waiting no matter what reader A does, and vice versa. Thus, neither player reads immediately, although the social benefits (that is, benefits to the other player) of an evaluation by either person (+5 on average) outweigh its cost (-1 on average). No one will read a message unless it offers a positive expected personal payoff, and many useful messages will never be read. (Moreover, if effort in evaluations can be chosen when a message is read, it will be insufficient.) Analogously, any John Grisham novel sells well, regardless of initial reviews, but excellent novels by Recommender Systems for Evaluating Computer Messages

Identifying Investor Sentiment from Price Paths: The Case of Football Betting

We examine the hypothesis that sentimental bettors can affect the path of prices in football betting markets. We hypothesize that sentimental traders follow the advice of false experts, believe excessively in momentum strategies, bet excessively on teams that are well known and covered in the media. We generate proxies for these sources of sentiment and show that point spreads move predictably over the course of the week, partially in response to variables known prior to the opening of betting. We show that a betting strategy of betting against the predicted movement in the point spread is borderline profitable. Copyright 1999 by University of Chicago Press.

Herding over the career

Abstract We develop a model of decision-making when managers have private information about their abilities. With no private information about ability, managers ‘herd’. However, with sufficient private information, managers inefficiently ‘anti-herd’. The model potentially illuminates recent empirical work on career concerns.

Bundling and Optimal Auctions of Multiple Products

We study the optimal (i.e. revenue maximizing) auction of multiple products. We make three major points. First, we extend the relationship between price discrimination and optimal auctions from the single-product case to the multiple-product case. A monopolist setting prices for multiple products may offer discounts on purchases of bundles of products; similarly, the optimal auction of multiple products facilitates price discrimination by allocating products inefficiently to customers who are willing to purchase both products. Second, we demonstrate that optimal auctions are qualitatively distinct from monopoly sales of multiple products. Because of uncertainty about the values of other consumers, two products are bundled probabilistically in an optimal auction for a customer who is willing to buy both of them. A customer may then receive a discount on a lower-valued product without receiving a higher-valued product. Third, we show that in an optimal auction of two products the allocation of one product may vary with the amount of competition for the other product.

The 'Own Children' fertility estimation procedure: A reappraisal

The Full Birth History has become the dominant source of estimates of fertility levels and trends for countries lacking complete birth registration. An alternative, the ‘Own Children’ method, derives fertility estimates from household age distributions, but is now rarely used, partly because of concerns about its accuracy. We compared the estimates from these two procedures by applying them to 56 recent Demographic and Health Surveys. On average, ‘Own Children’ estimates of recent total fertility rates are 3 per cent lower than birth-history estimates. Much of this difference stems from selection bias in the collection of birth histories: women with more children are more likely to be interviewed. We conclude that full birth histories overestimate total fertility, and that the ‘Own Children’ method gives estimates of total fertility that may better reflect overall national fertility. We recommend the routine application of the ‘Own Children’ method to census and household survey data to estimate fertility levels and trends.

What Worms for the Early Bird: Early Admissions at Elite Colleges

Early application programs have turned the college admissions process into a highly strategic arena. It is widely believed, but seldom acknowledged by colleges, that early applicants are favored in admissions decisions. This report is a brief summary of a book that will be published by Harvard University Press. We analyze admission records from 14 highly selective colleges, finding that early applicants are significantly more likely to be admitted than are regular applicants with similar qualifications. Our interviews with college students and high school counselors demonstrate a wide range of knowledge about the nature of early applications.

Giving College Credit Where It Is Due: Advanced Placement Exam Scores and College Outcomes

We implement a regression discontinuity design using the continuous raw Advanced Placement (AP) exam scores, which are mapped into the observed 1-5 integer scores, for over 4.5 million students. Earning higher AP integer scores positively impacts college completion and subsequent exam taking. Specifically, attaining credit-granting integer scores increases the probability that a student will receive a bachelor’s degree within four years by 1 to 2 percentage points per exam. We also find that receiving a score of 3 over a 2 on junior year AP exams causes students to take between 0.06 and 0.14 more AP exams senior year.

Shifting College Majors in Response to Advanced Placement Exam Scores

ABSTRACT:Do signals of high aptitude shape the course of collegiate study? We apply a regression discontinuity design to understand how college major choice is impacted by receiving a higher Advanced Placement (AP) integer score, despite similar exam performance, compared to students who received a lower integer score. Attaining higher scores increases the probability that a student majors in that exam subject by approximately 5 percent (0.64 percentage points), with some individual exams demonstrating increases as high as 30 percent. A substantial portion of the overall effect is driven by behavioral responses to the positive signal of receiving a higher score.

Academics vs. Athletics: Career Concerns for NCAA Division I Coaches

We analyze the promotions and firings of NCAA Division 1 college basketball and college football coaches to assess whether these coaches are rewarded for the academic performance of their players in promotion and retention decisions. We find that an increase in Academic Progress Rate, as measured by the NCAA, for a college team in either sport significantly reduces the probability that the coach is fired at the end of the season. We find little to no evidence that an increase in the Academic Progress Rate enhances the chances of advancement (in the form of outside job offers) for these coaches.