Rafael Tenorio

Revenue equivalence and bidding behavior in a multi-unit auction market: An empirical analysis

Revenue-equivalence of competitive and discriminatory formats is a major result for private-value multiunit auctions with risk-neutral bidders. Among the factors that may cause this result to break down, the most notorious ones are risk-aversion, value-affiliation, and endogenous bidder participation. Using data from competitive and discriminatory auctions undertaken in the Zambian foreign exchange market, the author analyzes revenue-equivalence and other bidding phenomena. The results indicate that (1) competitive auctions were revenue-superior due to higher participation; (2) high bidders adjusted with delay to an auction format change; and (3) a reservation bid was used as a policy instrument. Copyright 1993 by MIT Press.

ASSESSING INDIVIDUAL RISK ATTITUDES USING FIELD DATA FROM LOTTERY GAMES

We use information from the television game show with the highest guaranteed average payoff in the United States, Hoosier Millionaire, to analyze risktaking in a high-stakes experiment. We characterize gambling decisions under alternative assumptions about contestant behavior and preferences, and derive testable restrictions on individual risk attitudes based on this characterization. We then use an extensive sample of gambling decisions to estimate distributions of risk-aversion parameters consistent with the theoretical restrictions and revealed preferences. We find that although most contestants display risk-averse preferences, the extent of the risk aversion implied by our estimates varies substantially with the stakes involved in the different decisions.

The Economics of Professional Boxing Contracts

This article analyzes the characteristics and incentive effects of contractual practices in professional boxing. A boxer’s “purse” is linked to past rather than contemporaneous performance, thereby creating an incentives problem. Although consumption-smoothing considerations alleviate this problem, savings act as further insurance, and the likelihood of moral hazard increases. Observation of a boxer being poorly prepared for a fight after earning a very large purse is consistent with this prediction. These disappointing outcomes are likely driven by the absence of a strategic principal in the boxing market and by the prevalence of “casual” boxing fans.

Immigrant‐Native Wage Differentials and Immigration Reform

The U.S. Immigration Reform and Control Act of 1986 (IRCA) increased the monitoring of illegal employment and fined employers who hire undocumented immigrants. Since these provisions tax immigrant wages, it might be expected that the immigrant-native wage gap would increase after IRCA. This hypothesis is explored by decomposing immigrant-native wage differentials before and after IRCA. It is found that (i) the immigrant-native wage gap increased; (ii) in each year most of this gap was due to individual and job characteristics; (iii) the change in the gap is due primarily to overvaluation of native characteristics and to a lesser extent to undervaluation of immigrant characteristics. Copyright 1997 by Blackwell Publishing Ltd

On financing the internal enforcement of illegal immigration policies

We introduce a government budget constraint into an illegal immigration model, and show that the effect of increasing internal enforcement of immigration laws on the host country’s disposable national income depends on the mix of employer fines and income taxation used to finance the added enforcement. These issues are addressed under alternative assumptions about (a) the ability of host country employers to discern between legal and illegal workers, and (b) host country labor market conditions. Empirical evidence for the United States indicates that the employer sanctions program may have had a negative impact on disposable national income.

Some evidence on strategic quantity reduction in multiple unit auctions

Abstract Theoretical models of multi-unit auctions predict that bidders have a stronger incentive to reduce demand in uniform-price auctions than in discriminatory auctions. I find support for this prediction using data from foreign currency auctions in Zambia during the mid 1980s.