Erwin Amann

Expected revenue of all-pay and first-price sealed-bid auctions with affiliated signals

In the general symmetric auction framework of Milgrom and Weber (1982) it is shown—as a new manifestation of thelinkage principle—that the all-pay sealed-bid auction yieldshigher expected revenue than the standard first-price sealed-bid auction. This raises the question why sealed-bid auctions of the standard first-price variety are observed in practice whereas the all-pay variety is not.

Sophistication and the persistence of cooperation

Abstract Sophistication is costly. In an evolutionary framework using replicator dynamics, this fact is instrumental in explaining the persistence of cooperation in joint venture situations with prisoners dilemma characteristics, without relying on any reciprocity argument. Moreover, the asymptotically stable equilibrium is symbiotic with co-existence of cooperation, defection and cautious cooperation, very much like what we observe in reality.

Risk-Sharing in International Trade: An Analysis of Countertrade

Countertrade agreements in international trade refer to a trade practice in which an exporter agrees to purchase back commodities proportional to his original export sale in the future. This paper provides a rationale for why such an agreement might be efficient. More specifically, the paper argues that countertrade represents a rational response to market incompleteness by allowing the forward selling of commodities where no organized future market exists. This way countertrade helps to reduce risk by providing information on future market conditions and by offering insurance against random fluctuations in market conditions. Copyright 1994 by Blackwell Publishing Ltd.

Social Partnership and Exchange Rate Policy. — A Gametheoretic Approach

Many central banks in Europe fix the exchange rate of their currency to the Deutsche Mark. The arguments for choosing this policy center on a simple idea: A fixed exchange rate to an inflation-free currency of a big neighbour forces the exposed sector to keep constant its prices and wages. Otherwise the exposed sector would price itself out of the international and domestic market. What concerns the prices and wages of the sheltered sector it was hoped that they would not increase due to some form of solidarity among entrepreneurs or workers within a country [Frisch, 1976], or due to price and wage controls by the state or by the social partners, or due to sufficiently important substitution effects between the sectors.