College of Behavioral & Social Sciences

Permanent URI for this communityhttp://hdl.handle.net/1903/8

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

Browse

Author: search.filters.author.Cramton, Peter

Search Results

Now showing 1 - 10 of 39
  • Thumbnail Image
    Item
    Unions, Bargaining and Strikes
    (Edward Elgar, 2002-08-25) Cramton, Peter; Tracy, Joseph
  • Thumbnail Image
    Item
    Nonrandom Mixing Models of HIV Transmission
    (Springer-Verlag, 1989) Kaplan, Edward H.; Cramton, Peter; Paltiel, A. David
    Models of HIV transmission and the AIDS epidemic generally assume random mixing among those infected with HIV and those who are not. For sexually transmitted HIV, this implies that individuals select sex partners without regard to attributes such as familiarity, attractiveness, or risk of infection. This paper formulates a model for examining the impact of nonrandom mixing on HIV transmission. We present threshold conditions that determine when HIV epidemics can occur within the framework of this model. Nonrandom mixing is introduced by assuming that sexually active individuals select sex partners to minimize the risk of infection. In addition to variability in risky sex rates, some versions of our model allow for error (or noise) in information exchanged between prospective partners. We investigate several models including random partner selection (or proportionate mixing), segregation of the population by risky sex rates, a probabilistic combination of segregation and random selection induced by imperfect information (or preferred mixing), and a model of costly search with perfect information. We develop examples which show that nonrandom mixing can lead to epidemics that are more severe or less severe than random mixing. For reasonable parameter choices describing the AIDS epidemic, however, the results suggest that random mixing models overstate the number of HIV infections that will occur.
  • Thumbnail Image
    Item
    Collusive Bidding: Lessons from the FCC Spectrum Auctions
    (Springer-Verlag, 2000-05) Cramton, Peter; Schwartz, Jesse A.
    The Federal Communications Commission (FCC) spectrum auctions use a simultaneous ascending auction design. Bidders bid on numerous communication licenses simultaneously, with bidding remaining open on all licenses until no bidder is willing to bid higher on any license. With full revelation of bidding information, simultaneous open bidding allows bidders to send messages to their rivals, telling them on which licenses to bid and which to avoid. These strategies can help bidders coordinate a division of the licenses, and enforce the proposed division by directed punishments. We examine solutions to mitigate collusive bidding in the spectrum auctions, and then apply these ideas to the design of daily electricity auctions.
  • Thumbnail Image
    Item
    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.
  • Thumbnail Image
    Item
    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.
  • Thumbnail Image
    Item
    The Effect of Collective Bargaining Legislation on Strikes and Wages
    (MIT Press, 1999) Cramton, Peter; Gunderson, Morley; Tracy, Joseph
    Using Canadian data on large, private-sector contract negotiations from January 1967 to March 1993, we find that strikes and wages are substantially influenced by labor policy. The data indicate that conciliation policies have largely been ineffective in reducing strike costs. In contrast, general contract reopener provisions appear to make both unions and employers better off by reducing negotiation costs without systematically affecting wage settlements. Legislation banning the use of replacement workers appears to lead to significantly higher negotiation costs and redistribution of quasi-rents from employers to unions.
  • Thumbnail Image
    Item
    Shrewd Bargaining on the Moral Frontier: Toward a Theory of Morality in Practice
    (Philosophy Documentation Center, 1991) Dees, J. Gregory; Cramton, Peter
    From a traditional moral point of view, business practitioners often seem overly concerned about the behavior of their peers in deciding how they ought to act. We propose to account for this concern by introducing a mutual trust perspective, where moral obligations are grounded in a sense of trust that others will abide by the same rules. When grounds for trust are absent, the obligation is weakened. We illustrate this perspective by examining the widespread ambivalence with regard to deception about one’s settlement preferences in negotiation. On an abstract level, such deception generally seems undesirable, though in many individual cases it is condoned, even admired as shrewd bargaining. Because of the difficulty in verifying someone’s settlement preferences, it is hard to establish a basis for trusting the revelations of the other party, especially in competitive negotiations with relative strangers.
  • Thumbnail Image
    Item
    Promoting Honesty in Negotiation: An Exercise in Practical Ethics
    (Philosophy Documentation Center, 1993) Cramton, Peter; Dees, J. Gregory
    In a competitive and morally imperfect world, business people are often faced with serious ethical challenges. Harboring suspicions about the ethics of others, many feel justified in engaging in less-than-ideal conduct to protect their own interests. The most sophisticated moral arguments are unlikely to counteract this behavior. We believe that this morally defensive behavior is responsible, in large part, for much undesirable deception in negotiation. Drawing on recent work in the literature of negotiations, we present some practical guidance on how negotiators might build trust, establish common interests, and secure credibility for their statements thereby promoting honesty. We also point out the types of social and institutional arrangements, many of which have become commonplace, that work to promote credibility, trust, and honesty in business dealings. Our approach is offered not only as a specific response to the problem of deception in negotiation, but as one model of how research in business ethics might offer constructive advice to practitioners.
  • Thumbnail Image
    Item
    Eliminating the Flaws in New England's Reserve Markets
    (2000-03) Cramton, Peter; Lien, Jeffrey
    New England’s wholesale electricity market has been in operation, since May 1, 1999. When the market began it was understood that the rules were not perfect (Cramton and Wilson 1998). However, it was decided that it was better to start the market with imperfect rules, rather than postpone the market for an indefinite period. After several months of operation, we now have a sense of the extent market imperfections have resulted in observed problems. Here we study the three reserve markets—ten-minute spinning reserve (TMSR), ten-minute non-spinning reserve (TMNSR), and thirty-minute operating reserve (TMOR); we also discuss the closely related operable capability (OpCap) market. The paper covers the first four months of operation from May 1 to August 31, 1999. It is based on the market rules and their implementation by the ISO, and the market data during this period, including bidding, operating, and settlement information. Since that data are confidential, we have presented only aggregate information in the tables and figures that follow.2 Although this paper will cover only the reserves markets, we have studied the data from the energy, AGC, and capacity markets as well. Since all of the NEPOOL markets are interrelated, one cannot hope to understand one market without having an understanding of the others.
  • Thumbnail Image
    Item
    A Capacity Market that Makes Sense
    (Elsevier Science, 2005-06-15) Cramton, Peter; Stoft, Steven
    We argue that a capacity market is needed in most restructured electricity markets, and present a design that avoids problems found in the early capacity markets. The proposed market only rewards capacity that contributes to reliability as demonstrated by its performance during hours in which there is a shortage of operating reserves. The capacity price responds to market conditions, increasing when and where capacity is scarce and decreasing to zero when and where it is plentiful. Market power in the capacity market is addressed by basing the capacity price on actual capacity, rather than bid capacity, so generators cannot increase the capacity price by withholding supply. Actual peak energy rents (the short-run energy and reserve profits of a benchmark peaking unit) are subtracted from the capacity price. This allows the capacity market to more accurately control short-run profits and suppresses market power in the energy market. This design both avoids and hedges energy market risk, and by suppressing market power avoids regulatory risk. Risk reduction saves consumers money as do the performance and investment incentives inherent in the pay-for-performance mechanism.