Abstract not found

Generalized Vickrey mechanisms have received wide attention in the literature because they are efficient and strategyproof, i.e. truthful bidding is optimal whatever the bids of other agents. However it is well-known that it is impossible for an exchange, with multiple buyers and sellers, to be efficient and budget-balanced, even putting strategy-proofness to one side. A market-maker in an efficient exchange must make more payments than it collects. We enforce budget-balance as a hard constraint, and explore payment rules to distribute surplus after an exchange clears to minimize distance to Vickrey payments. Different rules lead to different levels of truthrevelation and efficiency. Experimental and theoretical analysis suggest a simple Threshold scheme, which gives surplus to agents with payments further than a certain threshold value from their Vickrey payments. The scheme appears able to exploit agent uncertainty about bids from other agents to reduce manipulation and boost allocative efficiency in comparison with other simple rules.

We consider auction design in a setting with costly preference elicitation. We motivate the role of proxy agents, that are situated between bidders and the auction, and maintain partial information about agent preferences and compute equilibrium bidding strategies based on the available information. The proxy agents can also elicit additional preference information incrementally during an auction. We show that indirect mechanisms, such as proxied ascending-price auctions, can achieve better allocative efficiency with less preference elicitation than direct mechanisms, such as sealed-bid auctions.

The Swedish parliament 1 has ordered its central rail administration, Banverket, to make the transition from a centrally allocated system to a market based system for the allocation of its railroads by 1995. In this partial privatization, Banverket will retain ownership and maintenance responsibility for the tracks, and will sell access to the tracks to private firms. The questions posed for initial study here are motivated by the resulting controversy. If the government is to own the tracks, can competition be used to facilitate coordination and use among the many users of the track? Or, is it impossible as a matter of principle for a decentralized competitive process to allocate track time as efficiently as possible, that is, to those who value it most? If such allocations can be achieved through a competitive process, what might be the form of the process? Proponents of decentralization claim that substantial improvements in efficiency are possible. They point to specific features of the current allocation process that suggest inefficiency in operation and they claim that such problems would be avoided by a properly designed and decentralized market system. Opponents claim that existence of a decentralized mechanism yielding efficient allocation of a rail network has never been demonstrated. Furthermore, as is made clear by the following quote from a key consulting report, 2 the critics of railway reform claim that decentralized decisions are not possible as a matter of principle: “These train paths cannot be treated as independent units, since they are not interchangeable, and depend on the specification of all other paths in the integrated timetable. There is therefore no common unit of capacity on a mixed-use railway which can be allocated to owners, priced and traded among a number of buyers and sellers.”

this paper. RECLAIM is. The RECLAIM program differs significantly from the SO 2 . First, allowances in RECLAIM are designated by areas so that some trading of credits from one area to another is not allowed. Second, there is no banking of credits in RECLAIM. Lastly, RECLAIM credits are also designated by compliance cycles and these cycles overlap. So neither existing design was of much relevance for our problems. We had to create a new system. IV. Would a Standard Auction Market Work? The basic economic features of RECLAIM are: (1) the program has very few participants (there are 390 NOx-producing facilities and 41 SOx-producing facilities, but only a handful were committed to market participation.); (2) there is no established trading history so that price discovery was not going to be a low cost activity; (3) there is a need to trade only at quarterly intervals when compliance checks are reported; and (4) buyers and sellers would prefer to buy or sell entire portfolios of credits to avoid market transaction riskthe undesired movement of prices as one is trading from one portfolio position to another. 9

This is an investigation into the design of a market-based process to replace NASA's current committee process for allocating Shuttle secondary payload resources (lockers, Watts and crew). The market-based process allocates budgets of tokens to NASA internal organizations that in turn use the budget to bid for priority for their middeck payloads. The scheduling algorithm selects payloads by priority class and maximizes the number of tokens bid to determine a manifest. The results of a number of controlled experiments show that such a system tends to allocate resources more efficiently by guiding participants to make resource and payload tradeoffs. Most participants were able to improve their position over NASA's current ranking system. Furthermore, those that are better off make large improvements while the few that do worse have relatively small losses. 2 I.

This chapter extends the EWA learning model to bilateral call market games (also known as the "sealed-bid mechanism" in two-person bargaining). In these games, a buyer and seller independently draw private values from commonly-known distributions and submit bids. If the buyer's bid is above the seller's, they trade at the midpoint of the two bids; otherwise they don't trade. We apply EWA by assuming that players have value-dependent bidding strategies, and they partially generalize experience from one value/cost condition to another in response to the incentives from nonlinear optimal bid functions. The same learning model can be applied to other market institutions where subjects economize on learning by taking into consideration similarity between past experience and a new environment while still recognizing the difference in market incentives between them. The chapter also presents a new application of EWA to a "continental divide" coordination game, and reviews 32 earlier studies comparing EWA, reinforcement, and belief learning. The application shows the advantages of a generalized adaptive model of behavior that includes elements of reinforcement, belief-based and direction learning as special cases at some cost of complexity for the benefit of generality and psychological appeal. It is a good foundation to build upon to extend our understanding of adaptive behavior in more general games and market institutions. In future work, we should investigate the similarity parameters, y and w, to better characterize their magnitude and significance in different market institutions. Keywords: Experimental economics, call markets, sealed-bid mechanism, learning JEL Classification: D44, D83, C92 August 2, 2000. Thanks to Terry Daniel for supplying data. This research has been...

Abstract. An e-market system is a concrete implementation of a market institution; it embeds one or more exchange mechanisms. E-market systems are also information systems which are information and communication technologies artifacts. This work puts forward an argument that the study of e-markets must incorporate both the behavioral economics as well as the information systems perspectives. To this end the paper proposes a conceptual framework that integrates the two. This framework is used to formulate a model, which incorporates the essential features of exchange mechanisms, as well as their implementations as is artefacts. The focus of attention is on two classes of mechanisms, namely auctions and negotiations. They both may serve the same purpose and their various types have been embedded in many e-market systems.

Abstract not found