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Traditional economic theory studies idealized markets in which prices alone can guide efficient allocation, with no need for central organization. Such models build from Adam Smith's famous concept of an invisible hand, which guides markets and renders regulation or interference largely unnecessary. Yet for many markets, prices alone are not enough to guide feasible and efficient outcomes, and regulation alone is not enough, either. Consider air traffic control at major airports. While prices could encourage airlines to take off and land at less congested times, prices alone do just part of the job; an air traffic control system is still indispensable to avoid disastrous consequences. With just an air traffic controller, however, limited resources can be wasted or poorly used. What's needed in this and many other real-world cases is an auction system that can effectively reveal prices while still maintaining enough direct control to ensure that complex constraints are satisfied.In Discovering Prices, Paul Milgrom-the world's most frequently cited academic expert on auction design-describes how auctions can be used to discover prices and guide efficient resource allocations, even when resources are diverse, constraints are critical, and market-clearing prices may not even exist. Economists have long understood that externalities and market power both necessitate market organization. In this book, Milgrom introduces complex constraints as another reason for market design. Both lively and technical, Milgrom roots his new theories in real-world examples (including the ambitious U.S. incentive auction of radio frequencies, whose design he led) and provides economists with crucial new tools for dealing with the world's growing complex resource allocation problems.

Auction theory. --- Auctions --- Prices --- Mathematical models.

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Procurement packaging has important effects on not only the bidders' bidding behavior, but also contractors' performance. By changing the size of public contracts, procurers can encourage (or discourage) market competition and improve contract performance, avoiding unnecessary cost overruns and project delays. In practice, there is no single solution about how to package public contracts. With procurement data from road projects in Nepal, this paper examines the optimal size of road contracts in rural areas. The optimum varies depending on policy objectives. To maximize the bidder participation, the length of road should be about 11 kilometers. To minimize cost overruns and delays, the contracts should be much larger at 17 and 21 kilometers, respectively. Compared with the current procurement practices, the findings suggest that procurers take more advantage of enlarging road packages, although contracts that are too large may increase the risk of discouraging firms from participating in public tenders.

Competition --- Contract Law --- Debt Markets --- Government Procurement --- Macroeconomics and Economic Growth --- Market entry --- Post Conflict Reconstruction --- Public procurement --- Rural roads, auction theory --- Transport --- Transport Economics Policy & Planning

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This book, which comprises eight chapters, presents a comprehensive critical survey of the results and methods of laboratory experiments in economics. The first chapter provides an introduction to experimental economics as a whole, with the remaining chapters providing surveys by leading practitioners in areas of economics that have seen a concentration of experiments: public goods, coordination problems, bargaining, industrial organization, asset markets, auctions, and individual decision making. The work aims both to help specialists set an agenda for future research and to provide nonspecialists with a critical review of work completed to date. Its focus is on elucidating the role of experimental studies as a progressive research tool so that wherever possible, emphasis is on series of experiments that build on one another. The contributors to the volume--Colin Camerer, Charles A. Holt, John H. Kagel, John O. Ledyard, Jack Ochs, Alvin E. Roth, and Shyam Sunder--adopt a particular methodological point of view: the way to learn how to design and conduct experiments is to consider how good experiments grow organically out of the issues and hypotheses they are designed to investigate.

Microeconomics --- Methodology of economics --- Operational research. Game theory --- -economie --- 338.313 --- 330.52 --- economische leerstelsels --- 330.0724 --- Kapitalisme. --- Liberaal systeem. Neo-liberalisme. Theorie van de onderhandeling. --- -330.0724 --- Experimental economics --- economie --- theories economiques --- 305.6 --- 330.3 --- AA / International- internationaal --- NBB congres --- 330.1 --- 330.1 Economische grondbegrippen. Algemene begrippen in de economie --- Economische grondbegrippen. Algemene begrippen in de economie --- Economics --- economische theorieen --- Risicotheorie, speltheorie. Risicokapitaal. Beslissingsmodellen --- Methode in staathuishoudkunde. Statische, dynamische economie. Modellen. Experimental economics --- Liberaal systeem. Neo-liberalisme. Theorie van de onderhandeling --- Kapitalisme --- Methodology --- Economie politique --- Méthodologie --- Experimental economics. --- Wirtschaftswissenschaften. --- Wirtschaftsforschung. --- Methode. --- Experimentelle Wirtschaftsforschung. --- Experiment. --- Economics - Methodology --- Battle of the Sexes game. --- Dutch auction. --- Ellsberg paradox. --- Lindahl equilibrium. --- Lindahl mechanism. --- Nash bargaining theory. --- Prisoner's Dilemma. --- Vickery auction. --- adaptive models. --- auction theory studies. --- blind-bid auction. --- call market. --- description invariance. --- efficient outcomes. --- fanning in hypothesis. --- focal points. --- futures market. --- illusion of control. --- impunity games. --- infinite horizon game. --- mechanism design. --- options market. --- posted-bid auctions. --- price list auction. --- scoring rules. --- simulation, computer. --- trigger strategies. --- Experimentelles Arbeiten --- Laborexperiment --- Test --- Freihandversuch --- Versuch --- Laborversuch --- Experimente --- Experimentelle Ökonomik --- Experimentelle Ökonomie --- Empirische Wirtschaftsforschung --- Methodik --- Verfahren --- Technik --- Methoden --- Methodologie --- Wirtschaftswissenschaften --- Ökonomie --- Wirtschaftswissenschaft --- Forschung --- SCIENCE ECONOMIQUE --- METHODOLOGIE

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This paper estimates the impact of a change in procurement strategy of a private buyer in the central Indian state of Madhya Pradesh. Beginning in October 2000, internet kiosks and warehouses were established that provide wholesale price information and an alternative marketing channel to soy farmers in the state. Using a new market-level dataset, the estimates suggest a significant increase in soy price after the introduction of kiosks, supporting the predictions of the theoretical model. Moreover, there is a robust increase in area under soy cultivation. The results point towards an improvement in the functioning of rural agricultural markets.

Access to Markets --- Agribusiness --- Agriculture --- Auction --- Average price --- Competitiveness --- Crops & Crop Management Systems --- Direct marketing --- E-Business --- Fair --- International Economics and Trade --- International market --- Macroeconomics and Economic Growth --- Market conditions --- Marketing --- Marketing Board --- Markets and Market Access --- Open auctions --- Price comparison --- Private Sector Development --- Sale --- Sales --- Spot markets --- Spread --- Surplus --- Warehouses --- Wholesale price --- Wholesale prices --- Wholesalers

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November 1999 - Financial reorganization under bankruptcy reduces a firm's debts to serviceable levels through negotiations overseen by courts. Academics have suggested using markets for such negotiations, giving equity holders and junior claimants call options to buy the firm back from senior creditors. Hausch and Ramachandran further develop such a market-based approach for situations in which claimants are severely cash-constrained and there is good reason for existing owner-managers to remain in control. Under the ACCORD scheme - Auction-based Creditor Ordering by Reducing Debts - creditors remain creditors but form a queue, to be serviced in sequence from the firm's operating cash flows. Creditors bid for their position in this queue. Those accepting greater proportionate reductions in the face value of their claims (perhaps most pessimistic about the firm's prospects) are placed ahead of the others. A preexisting hierarchy of claims is honored by having claimants bid for their positions within the relevant segment of the queue. No one in the queue, including owners (who are last), is paid anything until the (reduced) debts of the first in line are fully discharged. The queue then moves up and the next claimant in line is serviced. Deferred creditors, who must wait their turn for the firm's operating cash surpluses, are not junior creditors in the conventional sense. Hausch and Ramachandran determine equilibrium bidding strategies, showing that the firm's aggregate debts would be reduced to a more serviceable level. This would improve the incentives of the firm's owner-managers, who remain in control, to operate the firm efficiently. Economic resources would thus be better used, and losses already incurred would be efficiently and quickly allocated among creditors. Hausch and Ramachandran suggest that ACCORD would be appropriate for East Asia, where, despite new bankruptcy laws, inexperienced courts are unlikely to nudge creditors into a quick negotiated agreement nor to be able to cope with systemic bankruptcy. Moreover, when the government is a major unsatisfied creditor, whose agents may not act in the taxpayers' best interests, market-based solutions might remove political interference from restructuring decisions. Neither owners nor creditors would be worse off than they are now. This paper - a joint product of the Private Sector Development Department, and Poverty Reduction and Economic Management Sector Unit, East Asia and Pacific Region - is part of a larger effort in the region to understand and improve corporate restructuring and governance. The authors may be contacted at dhausch@bus.wisc.edu or sramachandran@worldbank.org.

Aggregate Debts --- Auction --- Bankruptcy --- Bankruptcy Laws --- Bid --- Call Options --- Cash Flows --- Claimant --- Claimants --- Creditor --- Creditors --- Debt Markets --- Debts --- Deposits --- Domestic Banks --- Equity --- Face Value --- Finance and Financial Sector Development --- Financial Literacy --- Interests --- Investment and Investment Climate --- Junior Creditors --- Macroeconomics and Economic Growth --- Market --- Markets --- Strategic Debt Management