David McAdams

Mechanism Choice and Strategic Bidding in Divisible Good Auctions: An Empirical Analysis of the Turkish Treasury Auction Market

We propose an estimation method to bound bidders’ marginal valuations in discriminatory auctions using individual bid-level data and apply the method to data from the Turkish Treasury auction market. Using estimated bounds on marginal values, we compute an upper bound on the inefficiency of realized allocations as well as bounds on how much additional revenue could have been realized in a counterfactual uniform price or Vickrey auction. We conclude that switching from a discriminatory auction to a uniform price or Vickrey auction would not significantly increase revenue. Moreover, such a switch would increase bidder expected surplus by at most 0.02 percent.

Carbon Allowance Auction Design: An Assessment of Options for the United States

Carbon allowance auctions are a component of existing and proposed regional cap-and-trade programs in the United States and are also included in recent proposed bills in the U.S. Congress that would establish a national cap-and-trade program to regulate greenhouse gases (“carbon”). We discuss and evaluate the two leading candidates for auction format: a uniform-price sealed-bid auction and an ascending-bid dynamic auction, either of which could be augmented with a “price collar” to ensure that the price of allowances is neither too high nor too low. We identify the primary trade-offs between these two formats as applied to carbon allowance auctions and suggest additional auction design features that address potential concerns about efficiency losses from collusion and other factors. We conclude that, based on currently available evidence, a uniform-price sealed-bid auction is more appropriate for the sale of carbon allowances than the other leading auction formats, in part because it offers increased robustness to collusion without significant sacrifice of price discovery.

Uniqueness in symmetric first-price auctions with affiliation

The first-price auction has a unique monotone pure strategy equilibrium when there are n symmetric risk-averse bidders having affiliated types and interdependent values.

On the Failure of Monotonicity in Uniform-Price Auctions

Except for well-studied special cases in which bidders have single-unit demand or bidders are risk-neutral with independent private values, equilibria of uniform-price auctions with private values need not possess familiar monotonicity properties. In particular, equilibria in weakly undominated strategies may exist in which some bidders bid strictly less on some units when they have strictly higher values for every unit.

Monotonicity in Asymmetric First-Price Auctions with Affiliation

I study monotonicity of equilibrium strategies in first-price auctions with asymmetric bidders, risk aversion, affiliated types, and interdependent values. Every mixed-strategy equilibrium is shown to be outcome-equivalent to a monotone pure-strategy equilibrium under the “priority rule” for breaking ties. This provides a missing link to establish uniqueness in the “general symmetric model” of Milgrom and Weber (Econometrica 50:1089–1122, 1982). Non-monotone equilibria can exist under the “coin-flip rule” but they are distinguishable: all non-monotone equilibria have positive probability of ties whereas all monotone equilibria have zero probability of ties. This provides a justification for the standard empirical practice of restricting attention to monotone strategies.

Uniform-Price Auctions with Adjustable Supply

In the uniform-price auction with adjustable supply, the seller decides how much to sell after receiving the bids so as to maximize its ex post profit. Given N bidders and adjustable supply, all equilibria of the uniform-price auction lead to price on order 1 N 3 below the Walrasian price. By contrast, given the usual market-clearing rule it is well-known that the uniform-price auction can lead to equilibrium prices on order 1 N below the Walrasian price.

Adjustable Supply in Uniform-Price Auctions: The Value of Non-Commitment

In uniform-price auctions, the seller sometimes retains flexibility to adjust the total quantity sold after receiving the bids, or simply lacks the ability to commit to a schedule of reserve prices (or supply curve). In this paper, I show that the seller raises more revenue in equilibrium given such adjustable supply than by committing to any supply curve.

Analysis of the potential for point-of-care test to enable individualised treatment of infections caused by antimicrobial-resistant and susceptible strains of Neisseria gonorrhoeae : a modelling study

Objective To create a mathematical model to investigate the treatment impact and economic implications of introducing an antimicrobial resistance point-of-care test (AMR POCT) for gonorrhoea as a way of extending the life of current last-line treatments. Design Modelling study. Setting England. Population Patients accessing sexual health services. Interventions Incremental impact of introducing a hypothetical AMR POCT that could detect susceptibility to previous first-line antibiotics, for example, ciprofloxacin or penicillin, so that patients are given more tailored treatment, compared with the current situation where all patients are given therapy with ceftriaxone and azithromycin. The hypothetical intervention was assessed using a mathematical model developed in Excel. The model included initial and follow-up attendances, loss to follow-up, use of standard or tailored treatment, time taken to treatment and the costs of testing and treatment. Main outcome measures Number of doses of ceftriaxone saved, mean time to most appropriate treatment, mean number of visits per (infected) patient, number of patients lost to follow-up and total cost of testing. Results In the current situation, an estimated 33 431 ceftriaxone treatments are administered annually and 792 gonococcal infections remain untreated due to loss to follow-up. The use of an AMR POCT for ciprofloxacin could reduce these ceftriaxone treatments by 66%, and for an AMR POCT for penicillin by 79%. The mean time for patients receiving an antibiotic treatment is reduced by 2 days in scenarios including POCT and no positive patients remain untreated through eliminating loss to follow-up. Such POCTs are estimated to add £34 million to testing costs, but this does not take into account reductions in costs of repeat attendances and the reuse of older, cheaper antimicrobials. Conclusions The introduction of AMR POCT could allow clinicians to discern between the majority of gonorrhoea-positive patients with strains that could be treated with older, previously abandoned first-line treatments, and those requiring our current last-line dual therapy. Such tests could extend the useful life of dual ceftriaxone and azithromycin therapy, thus pushing back the time when gonorrhoea may become untreatable.

Carbon Allowance Auction Design: An Assessment of Options for the U.S.

Carbon allowance auctions are a component of existing and proposed regional cap-and-trade programs in the U.S. and are also included in recent bills in the U.S. Congress that would establish a national cap-and-trade program in the U.S. to regulate greenhouse gases (“carbon”). We discuss and evaluate the two leading candidates for the auction format for carbon allowance auctions: a uniform-price sealed-bid auction and an ascending-bid dynamic auction, either of which could be augmented with a “price collar” to ensure that the price of allowances is neither too high nor too low. We identify the primary trade-offs between these auction formats as applied to carbon allowance auctions and suggest auction design choices that address potential concerns about efficiency losses from collusion and other factors. We conclude that a uniform-price sealed-bid auction is more appropriate for the sale of carbon allowances than the other leading choices, in part because it offers increased robustness to collusion without significant sacrifice in terms of price discovery.

On the benefits of dynamic bidding when participation is costly

Consider a second-price auction with costly bidding in which bidders with i.i.d. private values have multiple opportunities to bid. If bids are observable, the resulting dynamic-bidding game generates greater expected total welfare than if bids were sealed, for any given reserve price. Making early bids observable allows high-value bidders to signal their strength and deter others from entering the auction. Nonetheless, as long as the seller can commit to a reserve price, expected revenue is higher when bids are observable than when they are sealed.