Daniel A. Graham

Collusive Bidder Behavior at Single-Object Second-Price and English Auctions

Models of collusive bidder behavior at single-object second-price and English auctions are provided. The ind ependent private values model is generalized to permit the formulatio n of coalitions and a strategic response by the auctioneer. Cooperati ve strategies are found to be dominant in these models; coalitions of any size are viable, and the payoff to each member increases with th e size of the coalition. In addition, the collusive strategies of the coalition represent a noncooperative equilibrium. The optimal respon se of the auctioneer is to establish a reserve price that is a functi on of the coalitions size. These and other features of the model are found to be consistent with the essential features of actual behavio r. Copyright 1987 by University of Chicago Press.

The Demand for Insurance and Protection: The Case of Irreplaceable Commodities

Insurance and protection against various kinds of losses are both valuable activities provided to a large and perhaps increasing extent by the public sector.

PHANTOM BIDDING AGAINST HETEROGENEOUS BIDDERS

Abstract If IPV bidders are distributionally heterogeneous then a revenue maximizing English auctioneer will, in general, find it optimal to use a non-constant reserve price that is a function of the observed bid sequence. An example is provided.

Price expectations and global stability in economic systems

In this paper we study the global stability properties of both descriptive and optimally controlled economic systems possessing inherent non-linearities. Stability conditions for these non-linear models are established, and a complete characterization of the dynamic path is obtained. Moreover, the relationship between the global stability properties of descriptive and optimal control models is clarified, the trajectories of descriptive models are compared with those of the planning models and conditions are examined under which the behavior of completely stable descriptive models approximates optimal solutions.

On Convergence to Pareto Allocations

The recent book by Arrow and Hahn [1] provides an admirable survey of the work on non-tatonnement adjustment processes developed by Uzawa [4], Hahn and Negishi [2] and others. Such processes permit disequilibrium trading as long as successive allocations are Pareto-better, so that all agents have non-decreasing utility indicators through trading periods. In this paper we formalize a similar process which focuses upon the coalition formation problems at the heart of all such trading processes. While our process is somewhat less descriptive of the role of the decision calculus of individuals in determining successive allocations than the bidding process of Hurwicz, Radner and Reiter [3], for example, we do admit such processes as special cases and our coalition formation framework appears to emphasize more naturally the problem of inter-agent communication. Under a particular assumption regarding the implications of costless intercommunication, we show that successive coalition formation must eventually lead to a Pareto allocation with probability one.

The application of sequential sampling to simulation: an example inventory model

Four different sequential sampling procedures are applied to the analysis of data generated by a computer simulation experiment with a multi-item inventory model. For each procedure the cost of computer time required to achieve given levels of statistical precision is calculated. Also the cost of computer time using comparable fixed sample size methods is calculated. The computer costs of fixed sample size procedures versus sequential sampling procedures are compared.

Contingent Damages for Products Liability

SEVERAL factors combine to make product safety a difficult problem for both economic and legal analysis. The probability of a product-related accident, to begin with, depends typically on actions taken not only by the producer but also by the consumer. An accident might have occurred anyway; the action in question might not have made the accident a certainty. Information about these actions may be imperfect or nonexistent and may be obtainable only after an accident occurs. Accidents frequently entail losses such as death or disability for which there are no perfect market substitutes. Existing markets, moreover, may afford only limited opportunities for insuring these losses. Payments made by one party to the other in these circumstances can depend, in principle, on whether an accident occurs and on whatever information is available