Yizhaq Minchuk

Ranking asymmetric auctions

We compare the expected revenue in first- and second-price auctions with asymmetric bidders. We consider “close to uniform” distributions with identical supports and show that in the case of identical supports the expected revenue in second-price auctions may exceed that in first-price auctions. We also show that asymmetry over lower valuations has a stronger negative impact on the expected revenue in first-price auctions than in second-price auctions. However, asymmetry over high valuations always increases the revenue in first-price auctions.

A Note On The Effect Of Asymmetry On Revenue In Second-Price Auctions

We compare the sellers expected revenue in asymmetric second-price auctions with the benchmark case where all bidders have the average distribution. We show that with two bidders, asymmetry has a negative effect on revenue. However, for n > 2 bidders there is no clear observation we can make. We prove that in the case of weak asymmetry, sellers prefer asymmetry over low valuations and symmetry over high valuations. In addition, we show that a good approximation for the expected revenue in the case of weak asymmetry can be obtained by calculating the revenue of the symmetric auction with identical distributions equal to the geometric or arithmetic average.

Revenue in contests with many participants

We show that in a contest with a single prize, the expected effort made by the kth highest valuation participant bounds the sum of the expected efforts made by all of the participants with valuations less than the kth highest valuations. We also show that in the limit case of a contest with m prizes, the expected effort made by the kth highest valuation participant when the bidders are risk-neutral is greater than the expected effort in the risk-averse case.

Accountability and performance management: citizens’ willingness to monitor public officials

ABSTRACT In recent decades, the operating mechanisms of states and societies have transformed from traditional hierarchical relationships into a more horizontal structure. In this new setting, citizens may have a critical role in monitoring public accountability. This article explores citizens’ willingness to monitor public officials’ accountability and the factors that may influence it. Using a survey distributed in Israel in 2016, the analysis indicates that citizens view these interactions in terms of collective action problems aimed at minimizing freeriding. Government policy in these areas is irrelevant to citizens’ calculations.

Separating equilibria in auctions with two types of bidders

We consider two simultaneous, private value, second-price auctions with identical objects for sale and two types of bidders, strong and weak, in the sense of hazard rate stochastic dominance. We show that if the strong bidders are not too strong with respect to the weak bidders, then, by setting an appropriate reserve price, a separating equilibrium exists in which strong bidders will participate in the auction with only strong bidders, and weak bidders will participate in the auction with only weak bidders.

Prebidding first-price auctions with and without head starts

Abstract We study the effect of prebidding in first-price auctions with a single prize under incomplete information. The values of the n − 1 bidders are private information while bidder 1’s value is commonly known. Bidder 1 places his bid before all the n − 1 bidders. We show that regardless of his value, bidder 1 always has a positive effect on the expected highest bid. However, bidder 1’s contribution to the expected highest bid is not significant since the prebidding first-price auction with n bidders may be less profitable than the optimal simultaneous first-price auction with only n − 1 bidders. On the other hand, by giving the optimal head start to bidder 1, the prebidding first-price auction is always more profitable than the optimal simultaneous first-price auction with n − 1 bidders

The (in) effectiveness of procurement auctions in the public sector

ABSTRACT This article studies procurement auctions in the public sector using game theoretical tools. The article shows that when participants in an auction are agents with low abilities (low type), as is common in the public sector, they place the same contract request. As a result, the auction mechanism will rarely produce real competition, thus making this mechanism, which limits bidders to those already within the system, ineffective for use in the public sector job market.

Audit Fees Post-SOX: An Auction Model

The literature shows that audit fees have increased after the SOX ban to audit clients on non-audit services (NAS) but the reason behind it has been unclear until now. Using an auction modeling approach, this study aims to bridge this gap by providing a theoretical explanation for this enigma. In the first auction setting, auditors can compete for both auditing and NAS (the pre-SOX setting). We then investigate how the auction would look when auditors can compete on either auditing or NAS (the post-SOX setting). We show that audit fees will be higher in the post-SOX setting than the pre-SOX one. Furthermore, we show that the SOX ban on NAS would actually make auditors better off than before if NAS budgets remain at, or exceed, the pre-SOX amounts. This result holds even if NAS budgets were reduced but not drastically.