Affiliated Values Research Articles

Disclosure policies in all-pay auctions with affiliated values

We consider all-pay auctions with private and affiliated binary values. The organizer commits ex ante to fully disclosing or concealing bidders’ valuations. We examine the effects of full disclosure on bidders’ welfare and the organizer’s revenue (i.e., expected aggregate bid). We find that full disclosure, as opposed to full concealment, always yields a higher welfare for bidders. On the other hand, full concealment yields a higher revenue if the affiliation in bidders’ valuations is low or if there are only two bidders. Conversely, if the affiliation is high and there are sufficiently many bidders, full disclosure tends to increase revenue.

Reflections on the relational ontology of medical assistance in dying.

Canadian nursing practice has been profoundly influenced by the legalization of medical assistance in dying in 2016, requiring that nurses navigate new and sometimes highly challenging experiences. Findings from our longitudinal studies of nurses' experiences suggest that these include deep emotional responses to medical assistance in dying, an urgency in orchestrating the perfect death, and a high degree of relational impact, both professionally and personally. Here we propose a theoretical explanation for these experiences based upon a relational ontology. Drawing upon the work of Wildman, we understand a relational ontology to be one in which relationships are more fundamentally central than the conceptual entities that provide the context to practice. It is in a relationship that conceptual entities, and their affiliated values, are created and recreated. Seen as causal, relationships have ontological status, with important implications for how we consider the concepts of death, suffering, and time in this context. From a conceptual perspective, suffering is primarily self-defined based upon personal histories, time reflects the potential remaining until death, and death is primarily biological and amoral, although social discourses of a good and bad death surround the death trajectory. However, within a relational ontology of medical assistance in dying, these understandings shift. Death becomes primarily social rather than biological, suffering is shared, and time until death is now clearly delimited. Accordingly, nurses assume a profound responsibility for influencing outcomes that are authentically person-centered. These understandings provide important insights into nurses' experiences, enabling us to recognize the causal effects, both intended and unintended, of nurses' relational practices amidst the complexities of assisted death. Drawing on such a perspective, we find implications for how we provide spaces for nurses to reflect on, and have conversations about, their experiences with some of the greatest mysteries of life-death, suffering, and time.

Effects of competition in first-price auctions

This paper analyzes the effects of industrial concentration on bidding behavior and expected revenues. These effects are studied under the CIAPI model, an affiliated value set-up that nests a variety of valuation and information environments. We formally decompose the revenue effects coming from less competition into five types. The properties of these effects are discussed and conditions for (non)monotonicity of both the equilibrium bid and revenue are stated. Our results suggest that it is more likely that the seller benefits from less competition in markets with more complete valuation and information structures.

Common Values, Unobserved Heterogeneity, and Endogenous Entry in US Offshore Oil Lease Auctions

Although an auction of drilling rights is often cited as an example of common values, formal evidence has been limited by the problem of auction-level unobserved heterogeneity. We develop an empirical approach for first-price sealed-bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. We show that important features of the model are nonparametrically identified and apply a semiparametric estimation approach to data from US offshore oil and gas lease auctions. We find that common values, affiliated private information, and unobserved heterogeneity are all present. Failing to account for unobserved heterogeneity obscures the evidence of common values. We examine implications of our estimates for the interaction between affiliation, the winner’s curse, the auction rules, and the number of bidders in determining the aggressiveness of bidding and seller revenue.

Instrumental variables estimation of a simple dynamic model of bidding behavior in private value auctions

We provide the first, in experimental economics, consistent estimates of a dynamic learning model with a continuous outcome. The econometric approach we propose can be used in many experimental studies including auctions, bargaining with transfers, and gift exchange experiments. We focus on affiliated private value auctions, where subjects are generally assumed to converge to the rule-of-thumb bidding, but our general approach is applicable to many other settings. Our IV estimates suggest that subjects become significantly less aggressive over time; specifically, they decrease their bids in proportion to the previous period’s signal minus bid. However, the inconsistent OLS and FE estimators imply that subjects become significantly more aggressive over time—they raise their bids in proportion to the previous period’s signal minus bid. Our instruments are randomly generated by the experiment, and pass popular weak instrument tests.

Urban Environmental Evaluation Using Affiliated Private Value Auction Model

This study evaluates the policy that brings non-marginal changes in an urban environmental attribute, fire risk, by using real estate auction data. Our evaluation is based on the extrapolation of the value distribution for auctioned real estate. In the estimation, we propose a simulated method of moments that is based on the moment conditions on order statistics of bids. We consider the possibility of affiliation by applying the Archimedean copula. Our estimation result rejects the hypothesis that bidders' valuation for apartments is independent when we assume that the marginal distribution of value follows log-normal or exponential distributions.

Research on the Behavior of the Shill Bidding with Affiliated Values

On-line auction provides convenience, as well as causes the frequent occurrence of many deceits, the passage mainly provides the concealed conditions for the seller’s shill bidding behavior based on the anonymity of on-line auction, it discusses the bidder’s optimal decision quotation when the shill bidding behavior happens or nor in the affiliated value pattern. To establish the bidder and seller’s incomplete information dynamic game model when occurring the shill bidding and analyze the probability of shill bidding can provide the reference for bidder’s quotation. To consider the time, reserved price (price accepted by the seller) and the current highest auction price which affect the shill bidding and match the relevant nonhomogeneous poisson process and exponent distribution can provide the reference for bidders to judge if the shill bidding behavior occurs by sellers.

Common Values, Unobserved Heterogeneity, and Endogenous Entry in U.S. Offshore Oil Lease Auctions

In a environment, some market participants have private information relevant to others' assessments of their own valuations or costs. Economic theory shows that this type of informational asymmetry can have important implications for market performance and market design. Yet even for the classic example of an oil lease auction, formal evidence on the presence and strength of common values has been limited by the problem of auction-level unobserved heterogeneity that is likely to affect both participation in an auction and bidders' willingness to pay. Here we develop an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. We show that important features of the model are nonparametrically identified and apply a semiparametric estimation approach to data from U.S. offshore oil and gas lease auctions. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity - three distinct phenomena with different implications for policy and empirical work - are all present. Failing to account for unobserved heterogeneity obscures the empirical evidence of common values. We examine the implications of our estimates for the classic revenue ranking of sealed bid auction designs, and for the interaction between affiliation, the winner's curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue.

All-pay auctions with affiliated binary signals

We analyze all-pay auctions with affiliated values and binary signals. We analyze the unique symmetric equilibrium with any number of bidders and show that the bidders earn positive rents only if the equilibrium is monotone. We also characterize the symmetric equilibrium of the closely related two-player war of attrition.We compare expected revenues across these formats. All-pay auctions result in lower expected rents to the bidders than standard auctions, but they also induce inefficient allocations in some models with affiliated private values. With two bidders, the effect on rent extraction dominates, and the all-pay auctions outperform standard auctions in terms of expected revenue. With many bidders, standard auctions may result in higher expected revenue. The war of attrition outperforms the standard auctions in terms of revenue, but its ranking relative to all-pay auctions is ambiguous.

Number of Bidders and the Winner’s Curse

Abstract Within an affiliated value auction setting, we study the relationship between the number of bidders and the winner’s curse in terms of its frequency of occurrence and its expected harm. From a design perspective, we find that both the number of bidders and the level of affiliation are instrumental when choosing an auction format and whether to encourage or discourage bidder participation.

Common Values, Unobserved Heterogeneity, and Endogenous Entry in U.S. Offshore Oil Lease Auctions

An oil lease auction is the classic example motivating a common values model. However, formal testing for common values has been hindered by unobserved auction-level heterogeneity, which is likely to affect both participation in an auction and bidders' willingness to pay. We develop and apply an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. The approach also accommodates spatial dependence and sample selection. Following Haile, Hong and Shum (2003), we specify a reduced form for bidder entry outcomes and rely on an instrument for entry. However, we relax their control function requirements and demonstrate that our specification is generated by a fully specified game motivated by our application. We show that important features of the model are nonparametrically identified and propose a semiparametric estimation approach designed to scale well to the moderate sample sizes typically encountered in practice. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity - three distinct phenomena with different implications for policy and empirical work - are all present and important in U.S. offshore oil and gas lease auctions. We find that ignoring unobserved heterogeneity in the empirical model obscures the presence of common values. We also examine the interaction between affiliation, the winner's curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue.

Preemptive bidding and Pareto efficiency in takeover auctions

This paper extends the Fishman (1988) model of preemptive jump bidding in private value takeover auction to auctions with common and affiliated values. We show that in the presence of a common value component, jump bidding equilibrium results in higher social surplus. Furthermore, we show that, under certain conditions, allowing for preemptive jump bidding in common value auctions results in ex-ante Pareto improvement.

Preemptive Bidding and Pareto Efficiency in Takeover Auctions

This paper extends the Fishman (1988) model of preemptive jump bidding in private value takeover auction to auctions with common and affiliated values. We show that in the presence of a common value component, jump bidding equilibrium results in higher social surplus. Furthermore, we show that, under certain conditions, allowing for preemptive jump bidding in common value auctions results in ex-ante Pareto improvement.

The relationship of moral value evaluation with externalizing behaviour across value areas in adolescents

Recent studies have shown that higher levels of moral value evaluation (i.e., the attribution of importance to moral values) are consistently correlated with less externalizing behaviour in adolescents. The current study further investigates this relationship in a community sample of adolescents (N = 216, 100 males, MAGE = 15.2, SDAGE = 1.3), while differentiating between value areas (i.e., clusters of affiliated values: contract, truth andaffiliation; life and property, lawandlegal justice) and between delinquent and antisocial behaviour. Higher levels of moral value evaluation for the property, lawandlegal justice area were associated with less delinquent and antisocial behaviour, while controlling for gender and age. Contrastingly, the area contract, truthand affiliation was not associated with delinquent or antisocial behaviour, and life was positively associated with antisocial behaviour. Implications for the nature of moral value evaluation and previous research are discussed.

Profit maximization for secondary users in dynamic spectrum auction of cognitive radio networks

AbstractAs a powerful economic theory, auction mechanism has been extensively studied in dynamic spectrum allocation for cognitive radio networks (CRNs) recently. Different from most of existing works that focused on the mechanism design from the spectrum owner's side, we study from a new perspective on profit maximization of the secondary users (SUs). Because the spectrum auction mechanism has already been designed by the spectrum owner, we derive SUs' optimal bid strategies, which maximize their profits. First, we relax the limitation of SU's value on spectrum band, which is formerly defined as the transmission rate on channel, and introduce the affiliated value considering the impacts from other SUs. Further, the optimal value determination function is derived, which maximizes SU's expected profit; second, we analyze the auctioneer cheating issue, which has great influence on SU's profit, and the Nash equilibrium strategies for both spectrum owner and SUs are derived. Moreover, the repeated auction game mechanism is proposed that resists the auctioneer cheating effectively. Copyright © 2013 John Wiley & Sons, Ltd.

Multiple Motivations Consequences on Bidder's Optimal Strategy in Takeover Contests

This paper examines the optimal bidding strategy in takeover contests for a target firm, and the positive correlation between the bidders’ valuation. We consider risk neutral bidders who compete for the control of a target firm in which they get initial shareholdings. The bidder valuation for target firm is correlated with his motivations which determine the bidder’s strategy. We study bidder’s optimal strategy in mixed motivations setting. Since motivations are numerous, hypothesis of affiliated value in auctions allows to study bidder’s strategy. The paper shows that the impact of affiliation degree on bidder’s optimal strategy depends on their private signal and on the ratio between their initial shareholdings. Particularly, we found that if a potential bidder overbids when he gets toeholds in the target firm, the extent of overbidding is not monotonically increasing with the size of toeholds and the level of private signal. There is a threshold of private signal under which the bidder is more aggressive given the size of his toeholds and also in which the bidder is less aggressive. The target firm’s expected revenue increases with the degree of affiliation of bidder’s valuation.When potential bidders get identical size of toeholds, their bid doesn’t depend on the valuation’s affiliation degree. Their optimal offer increases both in their private signal and in toeholds. In this case, the bidder with highest signal wins and competition between bidders yields to an efficient allocation.

Preemptive bidding in takeover auctions with affiliated values

► Preemptive bidding reallocate profit from the seller to the first bidder and does not affect the social surplus. ► Higher correlation of bidders’ values leads to higher preemption rate but has ambiguous effect on the size of the preemptive bid. ► In affiliated value auctions jump bidding may results in expropriation of the entire seller's profit by the first bidder. ► Value affiliation positively affects profit expropriation but has ambiguous effect on the seller's expected profit. ► A significant increase in the value affiliation reduces the seller's expected profit. This paper extends Fishman's (1988) model of preemptive bidding in takeover auctions to auctions with affiliated values. It shows that preemptive bidding transfers wealth from the seller to the first bidder without affecting the profit of the second bidder and social welfare. It also shows that higher correlation between bidders’ values leads to higher preemption rates but has an ambiguous effect on the size of the opening bid. Finally, it shows that in auctions with affiliated values, even infinitesimal entry costs may lead to a preemptive jump bidding that allows the reallocation of the entire surplus from the seller to the first bidder.

Revenue comparison in common-value auctions: Two examples

When players' affiliated values are symmetrically distributed, expected revenue in the second-price auction equals or exceeds that in the first-price auction (Milgrom and Weber, 1982). We provide two common-value examples where this ranking fails when players are asymmetrically informed.

Competition May Reduce the Revenue in a First Price Auction with Affiliated Private Values

There is a widespread belief that in auctions with private values, the seller's revenue is increasing in the number of bidders. We show that there exists an auction setting with symmetric and affiliated private values in which the seller's expected revenue in a first price auction is decreasing in the number of bidders who participate in the auction.

Revenue Ranking of Discriminatory and Uniform Auctions with an Unknown Number of Bidders

An important managerial question is the choice of the pricing rule. We study whether this choice depends on the uncertainty about the number of participating bidders by comparing expected revenues under discriminatory and uniform pricing within an auction model with affiliated values, stochastic number of bidders, and linear bidding strategies. We show that if uncertainty about the number of bidders is substantial, then the discriminatory pricing generates higher expected revenues than the uniform pricing. In particular, the first-price auction might generate higher revenues than the second-price auction. Therefore, uncertainty about the number of bidders is an important factor to consider when choosing the pricing rule. We also study whether eliminating this uncertainty, i.e., revealing the number of bidders, is in the seller's interests, and discuss the existence of an increasing symmetric equilibrium.