Yaron Raviv

New Evidence on Price Anomalies in Sequential Auctions : Used Cars in New Jersey

This article examines the sequence of winning bids in the public auction of used cars in New Jersey for the presence of price anomalies. Unlike many studies of heterogeneous objects, where the effect of the order of sale on the price may not be credibly identified, here the effect of the order is identified, because the items are randomly selected for sale. In a further contrast to many other studies, these data indicate that the prices tend to increase as the auction proceeds. The data also indicate that once several items have been sold, there is no change in the bidding behavior or any further increase in prices.

Gambling By Auctions

We provide theoretical and empirical analysis of a selling mechanism used by an Internet web-site that combines important features of auctions and gambling. This is the first analysis of such a selling mechanism, which provides insights into how the two kinds of behavior might be related in real life. The winner of the object is the bidder with the highest bid not submitted by any other bidder. In the equilibrium of our game theoretical model, each bid made with positive probability yields the same probability of winning. Bidders are more likely to submit higher bids, and the bid distribution does not depend on the value of the object or the highest bid allowed if one controls for the number of bidders. Most of these key theoretical predictions are confirmed by the data.

Revenue Non-Equivalence between Auctions With Soft and Hard Closing Mechanisms: New Evidence from Yahoo!

We use a unique dataset to examine the revenue differences between auctions with a hard-close ending rule versus those with a soft-close ending rule. We find that selling items using the soft-close rule increases the selling price by an amount between

Age, Human Capital and the Quality of Work: New Evidence from Old Masters

25 and

The Optimal Jury Size When Jury Deliberation Follows a Random Walk

44 (or 13–20 percent) over the hard-close format. One possible theoretical explanation for these results is that the hard-close ending rule accommodates the practice of sniping, which leads to a lower expected selling price. We find empirically that a lack of experience could help to explain why, in spite of the revenue differences, some sellers select the hard-close ending rule.

Uncertainty and Auction Outcomes: Evidence from Used Car Actions

The links between individual ability, human capital investment, and quality of output are generally hard to examine because in most situations output results from multiple inputs and often through complex contracting processes. We overcome these problems by examining life-cycle artistic output quality as reflected in art auction prices. First, we observe an inverted U-shaped age-quality of work profile similar to the conventional age–wage profile. Second, we find that the degree of concavity increases for those with higher native ability. Third, we find that working for a patron rather than selling directly to the market is associated with a flatter age profile. Fourth, we find evidence that formal education increases the concavity of the age-quality of work profile. These results are consistent with the theory and demonstrate that artists respond to incentives to invest in human capital.

Where Have All the Heroes Gone? A Self-Interested, Economic Theory of Heroism

The existing literature does not agree on the optimal jury size. We demonstrate that the probability of type I and type II errors is not sensitive to the number of jurors under the following three conditions: jurors receive independent signals about a defendant’s guilt during the evidence stage of the trial; the jurors truthfully reveal their signals before deliberations begin through their votes on the first ballot; and the jury’s deliberation follows a random walk. Since the opportunity cost of jury service is positive, this implies an optimal jury size of one.

The Role of the Bidding Process in Price Determination: Jump Bidding in Sequential English Auctions

I study the sequence of bidding in an open-outcry English auction to examine how uncertainty affects auction outcomes. I do this by analyzing a data set that was collected from a series of public auctions of used cars in New Jersey. I conjecture that the uncertainty is related to the auction’s progress and demonstrate that, empirically, an increase in the uncertainty is associated with an increase in the number of rounds that is required to sell an object and with a reduction in the ratio of the selling price to the presale estimate.

Decomposing Wage Gaps between Ethnic Groups: The Case of Israel

Heroism is a valued part of any society, yet its realization depends on the decisions of individual actors and a public reward to individuals who undertake heroic actions. Military combat related activities provide a useful starting point for thinking about the empirical nature of heroism. Interestingly, if we define heroism by those who have been awarded military honors such as the Congressional Medal of Honor, the number of heroes has actually fallen in the past 35 years. We develop a theory to explain heroism in a rational decision-making framework, and we model the case in which individuals respond to danger to themselves and others based on the costs and benefits associated with acts of courage. We also provide insight into how a government may wish to optimally subsidize heroic actions. We then use our model to understand why the observed decline in heroism could, in fact, be both an optimal individual and social response.