Agricultural & Resource Economics Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/2739
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Item To bid or not to bid: An investigation into economic incentives underling auction participation(2012) DePiper, Geret Sean; Lipton, Douglas W; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation investigates the individual characteristics correlated with auction participation decisions using data from two commercial fishing license buybacks. I use the joint empirical analysis of stated and revealed preferences, with two major findings emerging. First, the results of my analysis suggest that individuals with relatively low willingness to accept values and low engagement in the fishery faced problems with the participation decision which prevented them from tendering bids in the auction. This has serious policy implications given that the efficiency of reverse auctions relies on buying goods back from individuals who value them the least. The low participation rate suggests that the licenses bought back represent between 47 - 64 percent of the maximum achievable with the same funds under a first best outcome. Second, fishermen are frequently modeled as strict profit maximizers and harvest histories are often assumed to serve as a good proxy for expected future profits in many circumstances. I find evidence against both of these assumptions. Indicators for bequest and enjoyment values are associated with an increased bid equivalent to that of a $6,500 - $20,000 increase in annual profits. Indicators of bequest and enjoyment values are also significantly correlated with the decision of whether to tender a bid at all. Expected future usage patterns are an important consideration in the participation decisions, and the expected usage can differ significantly from past usage patterns. These results suggest that market experience plays an important role in auction participation decisions, and the problems which develop from inexperience should be addressed explicitly through the auction design.Item Three Empirical Studies in Market Design(2009) Stocking, Andrew James; Cramton, Peter; Lange, Andreas; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Market design is the development of mechanisms that improve market efficiency and build on an understanding of the interaction between human behavior and market rules. The first chapter considers the sale of a charitable membership where the charity poses the market design question of how to price these memberships to capture the maximum value from donors' altruism. Using an online natural field experiment with over 700,000 subjects, this chapter tests theory on price discounts and shows large differences in donation behavior between donors who have previously given money and/or volunteered. For example, framing the charity's membership price as a discount increases response rates and decreases conditional contributions from former volunteers, but not from past money donors. This chapter thereby demonstrates the importance of conditioning fundraising strategies on the specifics of past donation dimensions. The second chapter examines an auction used to solve the assignment and price determination problems where price depends on the propensity to own or farm the land, a non-market good. This chapter studies bidder behavior in a reverse auction where landowners compete to sell and retire the right to develop their farmland. A reduced form bidding model is used to estimate the role of bidder competition, winner's curse correction, and the underlying distribution of private values. The chapter concludes that the auction enrolled as much as 3,000 acres (12 percent) more than a take-it-or-leave-it offer (i.e., non-auction program) would have enrolled for the same budgetary cost. Finally, the third chapter considers the online advertising word auction. The pricing determination and assignment problem must occur for over 2,000 consumer searches each second. Theory is developed where asymmetric advertisers compete and an advertiser-optimal equilibrium bidding strategy is presented that is robust to this asymmetry. Within this rich strategy space, it is shown that advertiser subsidization can be revenue increasing for the search engine. Using a novel dataset of more than 4,500 keyword bids by three firms on four search engines, a simulation of the auction environment illustrates that bidder subsidization is indeed revenue positive and can be improved upon by imposing bid caps or fixed bids on the subsidized bidder.