Ferdinando Colombo

Auctions with a Minimum Requirement of Bids

We show that in a procurement auction with independent and private costs of production and a positive cost of preparing a bid, the requirement of a minimum number of offers for the good to be bought always yields a unique (perfect) Bayesian equilibrium where no firm enters a bid, whatever its cost of production, the number of potential bidders and the size of the bidding cost. Copyright Blackwell Publishing Ltd/University of Adelaide and Flinders University of South Australia 2003.

Reputazione, flessibilità e durata ottima dei contratti

We study the optimal length of a delegation contract in an incomplete information model where an agent plays a (possibly) repeated game on behalf of his principal. A short-term contract provides the principal with the flexibility to replace an agent who has proved not to be suitable for his job, while a long-term contract allows the agent to build a reputation for being trustworthy in his relationships with third parties. When contracts are renewable, the relationship between principal and agent may sometimes turn out to be stable even with short-term contracts. In this paper we show that this implies a non-monotonic relation between the importance of reputation and the optimal length of delegation contracts. In particular, in games where reputation is very important, short-term delegation contracts can be optimal. The implications of our analysis are illustrated by means of a few examples: the problem of credibility in the management of monetary policy, vertical relationships within firms, the strategic interactions between lenders and borrowers.

The Game Take-or-Play: A Paradox of Rationality in Simultaneous Move Games

We show that paradoxical conclusions similar to those emerging from reasonings of backward induction can arise also in simultaneous move games with incomplete information. Copyright Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research 2003.