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on Economic Design |
| By: | Yannai A. Gonczarowski; Michael Yin; Shirley Zhang |
| Abstract: | We extend the seminal model of Pathak and S\"onmez (2008) to a setting with multiple school districts, each running its own separate centralized match, and focus on the case of two districts. In our setting, in addition to each student being either sincere or sophisticated, she is also either constrained - able to apply only to schools within her own district of residence - or unconstrained - able to choose any single district within which to apply. We show that several key results from Pathak and S\"onmez (2008) qualitatively flip: A sophisticated student may prefer for a sincere student to become sophisticated, and a sophisticated student may prefer for her own district to use Deferred Acceptance over the Boston Mechanism, irrespective of the mechanism used by the other district. We furthermore investigate the preferences of students over the constraint levels of other students. Many of these phenomena appear abundantly in large random markets. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.04530&r=des |
| By: | Ori Haimanko (BGU) |
| Keywords: | All-pay auctions, incomplete information, behavioral strategies, Bayesian Nash equilibrium, interdependent types. |
| JEL: | C72 D44 D82 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2318&r=des |
| By: | Simon Finster; Patrick Loiseau; Simon Mauras; Mathieu Molina; Bary Pradelski |
| Abstract: | We study how pricing affects the division of surplus among buyers in auctions for multiple units. Our equity objective may be important, e.g., for competition concerns in downstream markets, complementing the long-standing debate on revenue and efficiency. We study a canonical model of auctions for multiple indivisible units with unit demand buyers and valuations with a private and a common component and consider all pricing rules that are a mixture (i.e., a convex combination) of pay-as-bid and uniform pricing. We propose the winners' empirical variance (WEV), the expected empirical variance of surplus among the winners, as a metric for surplus equity. We show that, for a range of private-common value proportions, a strictly interior mix of pay-as-bid and uniform pricing minimizes WEV. From an equity perspective, auctions with a higher private value component benefit from more price discrimination, whereas only auctions with a sufficiently high common value justify a more uniform pricing rule. We provide a criterion under which strictly mixed pricing dominates uniform pricing, a partial ranking of different mixed pricing formats, and bounds on the WEV-minimizing pricing under the assumption of log-concave signal distributions. In numerical experiments, we further illustrate the WEV-minimal pricing as a function of the private-common-value mix. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.07799&r=des |
| By: | Enrico Moretti; Moises Yi |
| Abstract: | Economists have long hypothesized that large and thick labor markets facilitate the matching between workers and firms. We use administrative data from the LEHD to compare the job search outcomes of workers originally in large and small markets who lost their jobs due to a firm closure. We define a labor market as the Commuting Zone×industry pair in the quarter before the closure. To account for the possible sorting of high-quality workers into larger markets, the effect of market size is identified by comparing workers in large and small markets within the same CZ, conditional on workers fixed effects. In the six quarters before their firm’s closure, workers in small and large markets have a similar probability of employment and quarterly earnings. Following the closure, workers in larger markets experience significantly shorter non-employment spells and smaller earning losses than workers in smaller markets, indicating that larger markets partially insure workers against idiosyncratic employment shocks. A 1 percent increase in market size results in a 0.014 and 0.023 percentage points increase in the 1-year re-employment probability of high school and college graduates, respectively. Displaced workers in larger markets also experience a significantly lower need for relocation to a different CZ. Conditional on finding a new job, the quality of the new worker-firm match is higher in larger markets, as proxied by a higher probability that the new match lasts more than one year; the new industry is the same as the old one; and the new industry is a “good fit” for the worker’s college major. Consistent with the notion that market size should be particularly consequential for more specialized workers, we find that the effects are larger in industries where human capital is more specialized and less portable. Our findings may help explain the geographical agglomeration of industries—especially those that make intensive use of highly specialized workers—and validate one of the mechanisms that urban economists have proposed for the existence of agglomeration economies. |
| JEL: | H0 J0 R0 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32250&r=des |