College of Behavioral & Social Sciences

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The collections in this community comprise faculty research works, as well as graduate theses and dissertations..

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Author: search.filters.author.Ausubel, Lawrence M.

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Now showing 1 - 7 of 7
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    Vickrey Auctions with Reserve Pricing
    (Springer-Verlag, 2004-04) Ausubel, Lawrence M.; Cramton, Peter
    We generalize the Vickrey auction to allow for reserve pricing in a multi-unit auction with interdependent values. In the Vickrey auction with reserve pricing, the seller determines the quantity to be made available as a function of the bidders’ reports of private information, and then efficiently allocates this quantity among the bidders. Truthful bidding is a dominant strategy with private values and an ex post equilibrium with interdependent values. If the auction is followed by resale, then truthful bidding remains an equilibrium in the auction-plus-resale game. In settings with perfect resale, the Vickrey auction with reserve pricing maximizes seller revenues.
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    Auctioning Many Divisible Goods
    (MIT Press, 2004) Ausubel, Lawrence M.; Cramton, Peter
    We study the theory and practical implementation of auctioning many divisible goods. With multiple related goods, price discovery is important not only to reduce the winner’s curse, but more importantly, to simplify the bidder’s decision problem and to facilitate the revelation of preferences in the bids. Simultaneous clock auctions are especially desirable formats for auctioning many divisible goods. We examine the properties of these auctions and discuss important practical considerations in applying them.
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    Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions
    (Blackwell, 1997) Ausubel, Lawrence M.; Cramton, Peter; McAfee, R. Preston; McMillan, John
    We examine bid data from the first two broadband PCS spectrum auctions for evidence of value synergies. First, we estimate a benchmark regression for the determinants of final auction prices. Then, we include variables reflecting the extent to which bidders ultimately won or already owned the adjacent wireless properties. Consistent with geographic synergies in an ascending-bid auction, prices were higher when the highest-losing bidder had adjacent licenses. The footprints of winning bidders suggest that they were often successful in realizing these synergies.
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    Auctioning Securities
    (University of Maryland, 1998-03) Ausubel, Lawrence M.; Cramton, Peter
    Treasury debt and other divisible securities are traditionally sold in either a pay-your-bid(discriminatory) auction or a uniform-price auction. We compare these auction formats with a Vickrey auction and also with two ascending-bid auctions. The Vickrey auction and the alternative ascending-bid auction (Ausubel 1997) have important theoretical advantages for sellers. In a setting without private information, these auctions achieve the maximal revenue as a unique equilibrium in dominant strategies. In contrast, the pay your-bid, uniform-price, and standard ascending-bid auction admit a multiplicity of equilibria that yield low revenues for the seller. We show how these results extend to a setting where bidders have affiliated private information. Our results question the standard ways that securities are offered to the public.
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    The Optimality of Being Efficient
    (Elsevier Science, 2001-03) Ausubel, Lawrence M.; Cramton, Peter
    In an optimal auction, a revenue-optimizing seller often awards goods inefficiently, either by placing them in the wrong hands or by withholding goods from the market. This conclusion rests on two assumptions: (1) the seller can prevent resale among bidders after the auction; and (2) the seller can commit to not sell the withheld goods after the auction. We examine how the optimal auction problem changes when these assumptions are relaxed. In sharp contrast to the no resale assumption, we assume perfect resale: all gains from trade are exhausted in resale. In a multiple object model with independent signals, we characterize optimal auctions with resale. We prove generally that with perfect resale, the seller’s incentive to misassign goods is destroyed. Moreover, with discrete types, any misassignment of goods strictly lowers the seller’s revenue from the optimum. In auction markets followed by perfect resale, it is optimal to assign goods to those with the highest values.
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    Demand Reduction and Inefficiency in Multi-Unit Auctions
    (2002-07) Ausubel, Lawrence M.; Cramton, Peter
    Auctions typically involve the sale of many related goods. Treasury, spectrum and electricity auctions are examples. In auctions where bidders pay the market-clearing price for items won, large bidders have an incentive to reduce demand in order to pay less for their winnings. This incentive creates an inefficiency in multiple-item auctions. Large bidders reduce demand for additional items and so sometimes lose to smaller bidders with lower values. We demonstrate this inefficiency in an auction model which allows interdependent values. We also establish that the ranking of the uniform-price and pay-as-bid auctions is ambiguous in both revenue and efficiency terms. Bidding behavior in spectrum auctions, electricity auctions, and experiments highlights the empirical importance of demand reduction.
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    Market-Based Alternatives for Managing Congestion at New York’s LaGuardia Airport
    (AirNeth Annual Conference, The Hague, 2007-04) Ball, Michael O.; Ausubel, Lawrence M.; Berardino, Frank; Cramton, Peter; Donohue, George; Hansen, Mark; Hoffman, Karla
    In the paper, we summarize the results of a project that was motivated by the expiration of the “High Density Rule,” which defined the slot controls employed at New York’s LaGuardia Airport for more than 30 years. The scope of the project included the analysis of several administrative measures, congestion pricing options and slot auctions. The research output includes a congestion pricing procedure and also the specification of a slot auction mechanism. The research results are based in part on two strategic simulations. These were multi-day events that included the participation of airport operators, most notably the Port Authority of New York and New Jersey, FAA and DOT executives, airline representatives and other members of the air transportation community. The first simulation placed participants in a stressful, high congestion future scenario and then allowed participants to react and problem solve under various administrative measures and congestion pricing options. The second simulation was a mock slot auction in which participants bid on LGA arrival and departure slots for fictitious airlines.