Daniel Quint

Identification and Inference in Ascending Auctions With Correlated Private Values

We introduce and apply a new nonparametric approach to identification and inference on data from ascending auctions. We exploit variation in the number of bidders across auctions to nonparametrically identify useful bounds on seller profit and bidder surplus using a general model of correlated private values that nests the standard independent private values (IPV) model. We also translate our identified bounds into closed form and asymptotically valid confidence intervals for several economic measures of interest. Applying our methods to much studied U.S. Forest Service timber auctions, we find evidence of correlation among values after controlling for a rich vector of relevant auction covariates; this correlation causes expected profit, the profit-maximizing reserve price, and bidder surplus to be substantially lower than conventional (IPV) analysis of the data would suggest.

Multilateral Bargaining with Concession Costs

This paper presents a new non-cooperative approach to multilateral bargaining. We consider a demand game with the following additional ingredients: (i) There is an exogenous deadline, by which bargaining has to end; (ii) Prior to the deadline, players may sequentially change their demands as often as they like; (iii) Changing ones demand is costly, and this cost increases as the deadline gets closer. The game has a unique subgame perfect equilibrium prediction in which agreement is reached immediately and switching costs are avoided. Moreover, this equilibrium is invariant to the particular order and timing in which players make demands. This is important, as multilateral bargaining models are sometimes too sensitive to these particular details. In our context, players with higher concession costs obtain higher shares of the pie; their increased bargaining power stems from their ability to credibly commit to a demand earlier. We discuss how the setup and assumptions are a reasonable description for certain real bargaining situations.

Imperfect competition with complements and substitutes

I study price competition in settings where end products are combinations of components supplied by different monopolists, nesting standard models of perfect complements and imperfect substitutes. I show sufficient conditions for a discrete-choice demand system to yield demand for each product which is log-concave in price, and has log-increasing differences in own and another products price, leading to strong comparative statics results. Many results familiar from simple models, like the price effects of mergers or changes in marginal costs, extend naturally to this more complex setting.

Anglo-Dutch Premium Auctions in Eighteenth-Century Amsterdam

An Anglo-Dutch premium auction consists of an English auction followed by a Dutch auction, with a cash premium paid to the winner of the first round. We study such auctions used in the secondary debt market in eighteenth-century Amsterdam. This was among the first uses of auctions, or any structured market-clearing mechanism, in a financial market. We find that this market presented two distinct challenges - generating competition and aggregating information. We argue that the Anglo-Dutch premium auction is particularly well-suited to do both. Modeling equilibrium play theoretically, we predict a positive relationship between the uncertainty in a securitys value and the likelihood of a second-round bid. Analyzing data on 16,854 securities sold in the late 1700s, we find empirical support for this prediction. This suggests that bidding behavior may have been consistent with (non-cooperative) equilibrium play, and therefore that these auctions were successful at generating competition. We also find evidence suggesting that these auctions succeeded at aggregating information. Thus, the Anglo-Dutch premium auction appears to have been an effective solution to a complex early market design problem.

Medieval Matching Markets

This paper studies the market microstructure of pre-industrial Europe. In particular we investigate the institution of the broker in markets and fairs, and develop a unique data set of approximately 1100 sets of brokerage rules in 42 merchant towns in Central and Western Europe from the late 13th to the end of the 17th century. We show that towns implemented brokerage as an efficient matchmaking institution in a two-sided market problem. Furthermore, towns differentiated seller-friendly from buyer-friendlier matching mechanisms. We show that the decision to implement matchmaking mechanisms, and whether these mechanisms would be buyer- or seller friendly, depends on the products in question and the stated policy goals of the town, as well as time and geographic variables.

Common Values and Low Reserve Prices

I show that the benefit of a high reserve price in a common-values ascending auction is lower than in the observationally equivalent private values setting. Put another way, when bidders have common values, empirical estimation based on a private-values model will overstate the value of a high reserve price. Via numerical examples, I show this same ranking typically applies to the level of the optimal reserve price as well, and often to the benefit of any reserve price, not just high ones. With common values, the optimal reserve can even be below the sellers valuation, which is impossible with private values.