Initial Bid Research Articles

Web Comparison of Three Contingent Valuation Techniques in Women of Childbearing Age: The Case of Ovulation Induction in Quebec.

BackgroundIn Canada, 11.5% to 15.7% of couples suffer from infertility. Anovulation, or failed ovulation, is one of the main causes of infertility in women. In Quebec, the treatment for ovulation induction and other services related to assisted reproductive technology (ART) have been partially reimbursed by the government since 2010.ObjectiveThis study aimed to compare the willingness to pay (WTP) of women of childbearing age to receive drug treatment in the event of failed ovulation according to 3 different contingent valuation methods.MethodsThe following elicitation techniques were used: simple bid price dichotomous choice (DC), followed by an open-ended question (DC-OE), and a simplified multiple-bounded discrete choice (MBDC). Each participant was randomly assigned to 1 of 3 elicitation techniques. Bid prices ranged from Can $200 to Can $5000. Of the 7 bid prices, 1 was randomly proposed to each participant in the DC and DC-OE groups. For the DC-OE group, if the answer to the DC bid price was no, respondents were asked what was the maximum amount they were willing to pay. For the MBDC group, each respondent was offered an initial bid price of Can $1500, and the subsequent bid price offer increased or decreased according to the answer provided. “Do not know” responses were considered as a “no”, and each individual was questioned as to their certainty after each choice. WTP values were estimated using probit and bivariate models; the Welsh and Poe model was also performed for the MBDC group.ResultsThe survey was conducted from 2009 to 2010 with a total sample of 680 women. Analyses were performed on 610 respondents (199 DC, 230 DC-OE, and 181 MBDC). Of the 70 respondents who were excluded, 6 did not meet the age criterion, 45 had an annual income less than Can $2500, and 19 did not respond to the WTP question. Mean WTP values were Can $4033.26, Can $1857.90, and Can $1630.63 for DC, DC-OE, and MBDC, respectively. The WTP for MBDC “definitely yes” and “probably yes” values were Can $1516.73 and Can $1871.22, respectively. The 3 elicitation techniques provided WTP value differences that were statistically significant (P<.01). The MBDC was the most accurate method, with a lower confidence interval (Can $557) and a lower (CI/mean) ratio (0.34).ConclusionsA positive WTP for ovulation induction was found in Quebec. Adding a follow-up question resulted in more accurate WTP values. The MBDC technique provided a more accurate estimate of the WTP with a smaller and, therefore, more efficient confidence interval. To help decision making and improve the effectiveness of the fiscal policy related to the ART program, the WTP value elicited with the MBDC technique should be used.

Analysis of households' willingness to pay for a renewable source of electricity service connection: evidence from a double-bounded dichotomous choice survey in rural Ethiopia

Getting access to electricity services for domestic consumption is still a luxury service in the rural areas of developing countries. For instance, about 55 percent of the total population do not have access to electricity service in Ethiopia. To alleviate the problem, the government of Ethiopia is intensively investing on hydroelectric dam construction so as to increase the coverage of electricity. However, the grid-line electricity supply in the scattered settlements of rural households of Ethiopia poses a challenge for connection. This study investigated households' preference for renewable source of electricity service connections and estimated potential willingness to pay for the services by considering solar PV electricity in addition to the grid-line. In this survey, 220 rural households were sampled from Hexosa (Harbe) and Boset (Xiyyo) districts in Ethiopia using systematic sampling methods. The result estimated by using bivariate probit model reveals that the median willingness to pay alone is not sufficient to recover the cost of connection of electricity service. However, among the two sources of renewable electricity services, households preferred grid line to solar electricity services irrespective of the payment scheme. Monthly instalment-based payment is more convenient for the rural household than lump sum connection cost payment regarding the payment scheme. Furthermore, the households' income level, level of education, age, location and amount of initial bid prices are important variables in determining the scale of households' willingness to pay for connection of electricity service. Therefore, based on the findings of the study, the following policy suggestions have been forwarded: there should be provision of electricity service that is suitable and preferred by the rural households and the community shall get various options of payment modalities.

That\u2019s the ticket: explicit lottery randomisation and learning in Tullock contests

Most laboratory experiments studying Tullock contest games find that bids significantly exceed the risk-neutral equilibrium predictions. We test the generalisability of these results by comparing a typical experimental implementation of a contest against the familiar institution of a ticket-based raffle. We find that in the raffle (1) initial bid levels are significantly lower and (2) bids adjust more rapidly towards expected-earnings best responses. We demonstrate the robustness of our results by replicating them across two continents at two university labs with contrasting student profiles.

Strategic Decisions in Takeover Auctions

This essay reviews selected theories and empirical evidence describing how bidders and targets navigate four complex decisions involved in any corporate takeover attempt: (1) deal initiation, (2) pre-offer toehold acquisition, (3) offer price and revisions, and (4) the method of payment. We focus in particular on how first-price or English (ascending price) auctions with two competing bidders and a single (pivotal) seller help understand bidder and target incentives in each of these strategic decisions. While largely descriptive of tender offers for control, the auction framework also helps explain choices made in takeover negotiations where the outside option is the outcome of an open auction. Empirical findings include the following key observations: (1) A large fraction of control bids for public targets - about 50% - are initiated by the target and not the bidder. (2) Notwithstanding takeover premiums averaging 40+%, only a small fraction (less than 5%) of bidders acquire a partial ownership position (a toehold) in the target prior to bidding. However, when they do acquire a toehold, it is large (on average 20%). (3) Rival bids are observed in less than 10% of the contests, suggesting that the initial public bid deters further competition. When rival bidder do enter the auction, they do so surprisingly quickly - within two weeks of the initial bid on average - suggesting that bidder valuations are correlated. Bid jumps are large (around 30%), consistent with significant bidding costs. The evidence also supports the hypothesis that the pre-offer runup in the target's stock price includes an element of rational deal anticipation by the market, and that the runup is understood as such by the two parties in merger negotiations. (4) Contrary to theories of bidder opportunistic behavior, the likelihood that a given deal is paid in bidder stock is higher when the target is highly informed about the bidder's operations and so able to value the bidder shares more precisely. This evidence supports the (nested) alternative theory that the bidder's preference to pay in stock rather than in cash is driven by concerns with adverse selection on the target side of the deal. Also, the initial market reaction to the stock payment decision is such that there is no evidence of subsequent abnormal long-run performance for long-short portfolios sorted on cash- versus stock as the payment method.

Auctions with different rates of patience: Evidence from the resale shoe market

Bids and asks are examined over time using auction data from a continuous auction of authentic deadstock sneakers. A theoretical analysis of a double auction over time shows that if buyers and sellers have different rates of patience, then a buyer (respectively, seller) who is patient will be more likely to set a lower initial bid (respectively, higher initial ask). This causes an increase in the unfulfilled bid–ask spread over time. These results are tested using data collected from the StockX website for two specific deadstock sneakers. Results show that the unfulfilled bid–ask spread is positively correlated with time.

Smallholder farmers’ willingness to pay for irrigation water: Insights from Eritrea

The role of irrigation water pricing as a signal for scarcity and opportunity cost of water, and financing tool for irrigation developments has been strongly upheld. While the ability and willingness to pay (WTP) of smallholder farmers for irrigation water could profoundly determine sustainability of irrigation projects, little empirical evidence exists about the consequences of irrigation water pricing based on direct survey of smallholder farmers’ WTP particularly from drier regions of the globe such as the Sahel. Here, we economically evaluate the consequences of irrigation water pricing through a direct survey of farmers’ WTP and the factors that affect farmers’ WTP for irrigation supply improvements. We collected unique data through a double-bound dichotomous-choice contingent valuation survey of smallholder irrigation farmers in Eritrea. Eritrea has set pricing guidelines designed to reflect irrigation water as an economic good, while the entire country is being swallowed by the ever-expanding Sahara desert as well as being home to globally the poorest smallholder farmers. Bivariate probit and logistic regression models were employed for data analysis and revealed: (1) some 54% of the farmers perceived water as an economic good; (2) about 76% of the farmers were willing to pay the initial offered bid for irrigation water; and (3) the average WTP of farmers was about 5% of average farm income. Our results further indicated that initial bid, land tenure security, age of a farmer, households’ income from irrigation farming and source of water being used are all significant determinants of farmers’ WTP for irrigation water supply improvement. Overall, our findings provide evidence that smallholder farmers are willing to pay for increased volumes of water for irrigation purposes and suggest that public-private partnerships for the storage and delivery of water for irrigation could be economically feasible, even in poor countries such as Eritrea.

Inside the 'Black Box' of Private Merger Negotiations

Using unique, hand-gathered data, this paper examines how public news about the target firm released publicly during the private merger negotiation process affects bidding strategies. We provide strong evidence that market reactions to information events during the private sale process have a substantial impact on takeover prices. However, the sensitivity of private bids to target-firm public market returns varies significantly depending on the source of the news. Moreover, bidders are more sensitive to news releases in their first private bids and have lower sensitivity to news released when they make bid revisions after the initial private bid submission. In general, bid responses to positive news are stronger than bid responses to negative news. Overall, our findings provide novel evidence suggesting that the market reactions to the release of information during merger negotiations have important implications for takeover costs.

Exclusive Merger Agreements and Lock-ups in Negotiated Corporate Acquisitions

In any negotiated corporate acquisition, there is a substantial risk that the deal will not be consummated. Changes in the business environment occasionally may lead the target board to renege. Another party may approach the target board with an alternative, presumably higher-priced, acquisition proposal; indeed, target management might initiate negotiations with a second party before presenting the initial bid to the shareholders. Alternatively, a competing bidder may directly present its proposal to target shareholders by making a tender offer for their shares. The exclusive merger agreement is intended to discourage the target board from reneging on the merger agreement or, at the least, to reimburse the initial bidder's up-front costs if the deals does not go through. The operative provisions of exclusive merger agreements may be conveniently divided into two basic categories: performance promises, such as a no-shop agreement; and lock-ups and cancellation fees. Any analysis of such provisions must begin with a recognition that there is a potential conflict of interest in all negotiated acquisitions. This article contends that the standards of review courts apply to exclusive merger agreements have failed to adequately address that conflict of interest. Accordingly, this article proposes a framework for analysis of such provisions. Specifically, the article explains that performance promises should be routinely enforced. In contrast, lock-ups and cancellation fees should be more closely scrutinized. Indeed, as a prophylactic measure, the article proposes that lock-ups or cancellation fees exceeding 10 percent of the transaction's value generally should be invalidated.

Hypothetical thinking and the winner’s curse: an experimental investigation

There is evidence that bidders fall prey to the winner’s curse because they fail to extract information from hypothetical events—like winning an auction. This paper investigates experimentally whether bidders in a common value auction perform better when the requirements for this cognitive issue—also denoted by contingent reasoning—are relaxed, leaving all other parameters unchanged. For my underlying research question, I used a lab experiment with two stages. In stage I, the subjects participate in a non-standard common value auction, called the wallet game, in which a naive bidding strategy can lead to both winner’s curse and loser’s curse. In stage II, the subjects in the treatment group learn whether their initial bid was the winning bid or not and they get the opportunity to change this bid. In this sense, the bidders face the same decision problems as in stage I again, but the need for hypothetical thinking is reduced in stage II. The overall pattern of the data suggests that the problem of irrational over- and underbidding can be weakened by giving the subjects ex ante feedback about their bid, but unlike related studies I also find negative effects of additional information.

E&amp;P Notes (January 2019)

E&amp;P Notes (January 2019)

Decentralized Auctioneerless Combinatorial Auctions for Multi-Unit Resource Allocation

Auction has been used to allocate resources or tasks to processes, machines, or other autonomous agents in distributed systems. Among various types of auctions, combinatorial auction (CA) allocates a bundle of items to each agent at once. Finding an optimal auction result for CA that maximizes total winning bid is NP-hard. Many time-efficient approximations to this problem work with a bid ranking function (BRF). However, the existing approximations are mostly for single-unit resource and demand an auctioneer. This paper proposes the first auctioneerless open-bid multi-unit CA (MUCA) scheme. It includes a BRF-based winner determination scheme that enables every agent to locally compute a critical bid value for it to win the MUCA and accordingly take its best response to other agent's bid and win declarations. It also allows each winner to locally compute its payment for a critical-value-based pricing scheme. We analyze stabilization, correctness, and consistency properties of the proposed approach. The simulation results confirm that the proposed approach identifies exactly the same set of winners as the centralized counterpart regardless of initial bid setting, but at the cost of the lower total winning bid and payment.

A streetcar named consumption, an object named desire

The focus of the present article is the Design Field inserted into the Cinema Field and its intervention in the production of props for Hollywood movies, which are desired by consumers after. The Nike Air Mag sneakers, for example, worn by the character Marty McFly in the movie Back to the future part II, created a sort of countdown by viewers for its launch. In 2011, Nike launched it on the market in a limited number of only one thousand and five hundred units in a virtual auction whose initial bid was five thousand and five hundred dollars. All pairs were sold quickly. Our goal is to understand the consumption of such props based on the theory of symbolic exchanges developed by Pierre Bourdieu.

Transportation planning and policy in the pursuit of mega-events: Boston's 2024 Olympic bid

Improved transportation systems is a key argument boosters offer local residents as to why they should support mounting a bid for the Olympic Games. Opponents argue that transportation improvement can and should take place without the mega-event and that a bid instead deviates resources away from necessary transport projects. Transport policy makers need a practicable understanding of how to make decisions under grand opportunities like the Olympic Games. I advance the theory under grand opportunities using Boston's transport planning approach for its bid to host the 2024 Olympic Games as a case study. Through an ethnography in Boston's bidding committee, content analysis of internal planning documents circulated among staff, and in-depth interviews with participants in the transport planning process, I analyze the reasons and process by which Boston 2024's Olympic transport proposal changed over time. I find that decision-making over transport emulated many characteristics of crisis; it was complex, risky, and occurred under high uncertainty. Once the initial bid was published, Bostonians demanded decisions for subsequent bid versions become transparent. Consequently, transport planners were forced to reduce complexity, to incur higher planning costs, and to discard projects beneficial for Boston's long-term development. I find that grand opportunities for transport were squashed over the course of Boston's Olympic bid. I conclude that grand opportunities move along a spectrum of high-low complexity during the decision-making process and thus propose to analyze this process with what I term the coincidental opportunism approach.

Highway Infrastructure: Issues Concerning Private-Sector Participation

This paper examines the economic issues and evidence surrounding the role of the private sector in providing highway infrastructure. The focus is on public-private partnerships (PPPs) or long-term concession agreements between governments and private firms. PPP proponents have called for shifting infra- structure construction to the private sector to take advantage of more efficient provision of projects and the transfer of project risk from taxpayers to investors. Evidence from the United States and abroad does not consistently support this contention, although limitations in the research paradigms make a significant portion of the evidence of limited value. It is likely that idiosyncratic issues related to a particular project and the type of government involvement or over- sight come into play. Another issue associated with expanding the use of PPPs for public investment is the design of concession contracts. Some contracts are renegotiated, distorting incentives for bidding up front and for efficient production once the project moves forward. To get the incentives right, PPPs should involve competitive bidding, no contract renegotiation, and the potential for bankruptcy for participating private firms who overestimate the revenues that can be generated or underestimate the costs in their initial bids.

E-Application and Dss for Farmers to Sell Food Crops Through E-Auction

Farmers have been facing issues while selling their food crops in market due to intermediate persons, who actually got profit by setting low price while buying from farmers and later sell the same at higher price to the customers. Through e-application is developed for farmers to set their own price to their products and allows buyers for e-auction. Farmers can set the initial bid amount based on quality, life time and current market price of the products before going for e-auction. The buyers can find nearest sellers through GPS navigation system. Choices locked once validity of bidding over and corresponding buyer, seller get notified through SMS. The interface also act as Decision Support System(DSS) for farmers to post their queries for getting advice's from agriculture specialists.

The Influences of Place Meanings and Risk Perceptions on Visitors’ Willingness to Pay for Climate Change Adaptation Planning in a Nature-Based Tourism Destination

Travel to nature-based tourism (NBT) destinations contributes to the economic vitality of many communities. However, NBT is especially vulnerable to changes in climate, such as shifts in weather patterns, and changes in environmental conditions that can directly influence outdoor recreation experiences. Communities, parks, and protected areas in NBT destinations have started to respond to climate change threats by assessing their adaptive capacity and planning adaptation strategies. Climate adaptation planning within NBT destinations necessitate local support and the leveraging of proximate resources. Yet, strategies to integrate visitors into climate adaptation efforts is not common, even though visitors’ support for climate change planning and policy may be high. Little is known about the relationship between visitors’ support for adaptation planning and their sociodemographic characteristics, their perceptions of climate-related risks, or the meanings they assign to destinations affected by climate change. In this study, we analyze visitors’ personal attributes, trip characteristics, unique emotional ties and perceptions of the places they visit in relation to their willingness-to-pay (WTP) for a license plate that would direct funds toward regional climate adaptation planning. Survey data were collected on-site with NBT visitors and analyzed using binary logistic regression models. Results showed a WTP $30 annually is significantly influenced by increased income, age, climaterelated risk perceptions, and place meanings. Similarly, WTP more than the initial bid (i.e., >$30/year) for climate change adaptation and planning is significantly predicted by increased income and destination loyalty, as well as negative perceptions of climate change risks. This study contributes to a broader understanding of how recreationists and visitors can be incorporated into climate adaptation planning, demonstrating the possibility of a novel funding source. Subscribe to JPRA

Sold Below Value? Why Takeover Offers Can Have Negative Premiums

AbstractMany studies have acknowledged the existence of negative offer premiums where the initial bid undercuts the target's preannouncement market price. However, this phenomenon has not been explained. Negative premiums occur frequently and are no measurement error. We demonstrate theoretically and empirically that “hidden earnouts,” where target shareholders participate in the bidder's share of joint synergies, and corrections of overvaluation explain negative premiums. We find that target shareholders profit from the consummation of a takeover even if the announced offer has a negative premium. Our theory generalizes to low positive premiums with predictive power for the bottom 25% of all premiums.

Optimal inventory control with sequential online auction in agriculture supply chain: an agent-based simulation optimisation approach

With the development of e-commerce, in agriculture supply chain, online auction is adopted as an inventory clearing tool. Comparing to mathematical models studying inventory control over online sequential auctions, our agent-based simulation model could systematically describe the complexities of bidders’ information interactions and behaviour preferences caused from financial and production perspectives, and by other supply chain members. In addition, we take into account the complex and dynamic market environment, which will impact the operation effect of auction policies. With identical auction items, the profit-maximising firm must decide auction lot-size, which is the number of units in each auction, minimum initial bid, and the time interval between auctions. To obtain the optimal solution, nested partitions framework and optimal expected opportunity cost algorithm are integrated to improve computation accuracy and efficiency. A case study based on real data is conducted to implement and validate the proposed approach. Furthermore, based on the model, the paper studies the sensitivities of the decision variables under different supply and demand scenarios.

Rethinking the laryngopharyngeal reflux treatment algorithm: Evaluating an alternate empiric dosing regimen and considering up‐front, pH‐impedance, and manometry testing to minimize cost in treating suspect laryngopharyngeal reflux disease

Empiric proton pump inhibitor (PPI) trials for laryngopharyngeal reflux (LPR) are common. A majority of the patients respond to acid suppression. This work intends to evaluate once-daily, 40 mg omeprazole and once-nightly, 300 mg ranitidine (QD/QHS) dosing as an alternative regimen, and use this study's cohort to evaluate empiric regimens prescribed for LPR as compared to up-front testing with pH impedance multichannel intraluminal impedance (MII) with dual pH probes and high-resolution manometry (HRM) for potential cost minimization. Retrospective cohort review and cost minimization study. A chart review identified patients diagnosed with LPR. All subjects were treated sequentially and outcomes recorded. Initial QD/QHS dosing increased after 3 months to BID if no improvement and ultimately prescribed MII and HRM if they failed BID dosing. Decision tree diagrams were constructed to determine costs of two empiric regimens and up-front MII and HRM. Ninety-seven subjects met the criteria. Responders and nonresponders to empiric therapy were identified. Seventy-two subjects (74%) responded. Forty-eight (67% of responders and 49% of all) improved with QD/QHS dosing. Forty-nine (51%) subjects escalated to BID dosing. Twenty-four subjects (33% of responders and 25% of all) improved on BID therapy. Twenty-five subjects (26%) did not respond to acid suppression. Average weighted cost was $1,897.00 per patient for up-front testing, $3,033.00 for initial BID, and $3,366.00 for initial QD/QHS. An alternate QD/QHS regimen improved the majority who presented with presumed LPR. Cost estimates demonstrate that the QD/QHS regimen was more expensive than the initial BID high-dose PPI for 6 months. Overall per-patient cost appears less with up-front MII and HRM. 4. Laryngoscope, 127:S1-S13, 2017.

Bid Resistance by Takeover Targets: Managerial Bargaining or Bad Faith?

This paper examines management’s motives for rejecting takeover bids and the associated shareholder wealth effects. We develop measures of initial bid quality and find a significant negative correlation between the quality of a bid and rejection. The likelihood of higher follow-on offers decreases with bid quality and is greater when targets have classified boards and chief executive officers (CEOs) with significant personal wealth tied to the transaction. Target CEOs who fail to close high-quality offers experience a significant rate of forced turnover. Overall, the results support a price improvement motive for contested bids.