[ { "id": "authors:2xr9q-wnz20", "collection": "authors", "collection_id": "2xr9q-wnz20", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20220511-150585300", "type": "article", "title": "The role of information in a continuous double auction: An experiment and learning model", "author": [ { "family_name": "Anufriev", "given_name": "Mikhail", "orcid": "0000-0002-1842-6814", "clpid": "Anufriev-Mikhail" }, { "family_name": "Arifovic", "given_name": "Jasmina", "orcid": "0000-0002-7092-6541", "clpid": "Arifovic-Jasmina" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" }, { "family_name": "Panchenko", "given_name": "Valentyn", "orcid": "0000-0003-3144-7502", "clpid": "Panchenko-Valentyn" } ], "abstract": "We analyze trading in a modified continuous double auction market. We study how more or less information about trading in a prior round affects allocative and informational efficiency. We find that more information reduces allocative efficiency in early rounds relative to less information but that the difference disappears in later rounds. Informational efficiency is not affected by the information differences. We complement the experiment with simulations of the Individual Evolutionary Learning model which, after modifications to account for the CDA, seems to fit the data reasonably well.", "doi": "10.1016/j.jedc.2022.104387", "issn": "0165-1889", "publisher": "Elsevier", "publication": "Journal of Economic Dynamics and Control", "publication_date": "2022-08", "volume": "141", "pages": "Art. No. 104387" }, { "id": "authors:h8b1v-76536", "collection": "authors", "collection_id": "h8b1v-76536", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200727-111303655", "type": "publication_workingpaper", "title": "Price Formation in Multiple, Simultaneous Continuous Double Auctions, with Implications for Asset Pricing", "author": [ { "family_name": "Asparouhova", "given_name": "Elena", "clpid": "Asparouhova-E" }, { "family_name": "Bossaerts", "given_name": "Peter", "orcid": "0000-0003-2308-2603", "clpid": "Bossaerts-P" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "We propose a Marshallian model for price and allocation adjustments in parallel continuous double auctions. Agents quote prices that they expect will maximize local utility improvements. The process generates Pareto optimal allocations in the limit. In experiments designed to induce CAPM equilibrium, price and allocation dynamics are in line with the model's predictions. Walrasian aggregate excess demands do not provide additional predictive power. We identify, theoretically and empirically, a portfolio that is closer to mean-variance optimal throughout equilibration. This portfolio can serve as a benchmark for asset returns even if markets are not in equilibrium, unlike the market portfolio, which only works at equilibrium. The theory also has implications for momentum, volume and liquidity.", "doi": "10.7907/h8b1v-76536", "publisher": "California Institute of Technology", "publication_date": "2020-07-27" }, { "id": "authors:rbga4-d5742", "collection": "authors", "collection_id": "rbga4-d5742", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190711-102156844", "type": "article", "title": "Introduction to the Symposium on Research on Social Dilemmas", "author": [ { "family_name": "Oliveira", "given_name": "Angela C. M.", "clpid": "Oliveira-A-C-M" }, { "family_name": "Salmon", "given_name": "Timothy C.", "clpid": "Salmon-T-C" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Plott", "given_name": "Charles R.", "orcid": "0000-0001-8363-3628", "clpid": "Plott-C-R" }, { "family_name": "Putterman", "given_name": "Louis", "clpid": "Putterman-L" } ], "abstract": "In 2002 Elinor Ostrom and some of her colleagues organized a working group on Testing Theoretical Models of Individual Behavior in Dynamic Social Dilemmas and held the first meeting of this group at Indiana University Bloomington in 2003. There have now been five subsequent meetings of different incarnations of this group (2006, Max Planck Institute, Jena; 2008, Florida State University; 2010, Rice University; 2013, California Institute of Technology; 2015, Brown University) prior to the most recent one, the seventh in total, held in 2017 at the University of Massachusetts Amherst. With each of these meetings, the size of the group and scope of the work presented has changed and shifted as new people become part of the group and as the research questions relevant to social dilemma researchers change over time. As a way of commemorating these events, the organizers have felt that it would be useful to create special issues or symposia in journals related to the meetings as a way of capturing a snapshot of the issues at the frontier of social dilemma research at each point in time. The 2013 meeting at Cal Tech was the first to take place after Ostrom's death in 2012, and it produced two such special issues, in part to memorialize her: one at the Journal of Theoretical Politics edited by Eric Coleman and Rick Wilson published in 2016, and one at Experiment Economics edited by Jimmy Walker and Mark Isaac published in 2015. In conjunction with the 2017 meetings at UMass Amherst, a call for papers went out for submissions to this current Symposium issue inviting submissions from people who have been affiliated with this group and to others working in the area so that we could present a compelling set of papers that encompass a broad range of the work aimed at helping us to better understand issues related to social dilemmas. The journal received a large number of submissions of very high\u2010quality work that was sent through the standard review process for the journal. In the end we are publishing eight of those submissions and are pleased with the quality and breadth of coverage these papers represent. We are also happy that while we received and will be publishing papers by authors with a direct association with these meetings, we also received many submissions by authors with no connection to the meetings and will be publishing several of these as well.", "doi": "10.1111/ecin.12824", "issn": "0095-2583", "publisher": "Wiley", "publication": "Economic Inquiry", "publication_date": "2020-01", "series_number": "1", "volume": "58", "issue": "1", "pages": "9-11" }, { "id": "authors:aja3h-jjv83", "collection": "authors", "collection_id": "aja3h-jjv83", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20180718-090852064", "type": "article", "title": "Learning to alternate", "author": [ { "family_name": "Arifovic", "given_name": "Jasmina", "orcid": "0000-0002-7092-6541", "clpid": "Arifovic-J" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "The Individual Evolutionary Learning (IEL) model explains human subjects' behavior in a wide range of repeated games which have unique Nash equilibria. Using a variation of 'better response' strategies, IEL agents quickly learn to play Nash equilibrium strategies and their dynamic behavior is like that of humans subjects. In this paper we study whether IEL can also explain behavior in games with gains from coordination. We focus on the simplest such game: the 2 person repeated Battle of Sexes game. In laboratory experiments, two patterns of behavior often emerge: players either converge rapidly to one of the stage game Nash equilibria and stay there or learn to coordinate their actions and alternate between the two Nash equilibria every other round. We show that IEL explains this behavior if the human subjects are truly in the dark and do not know or believe they know their opponent's payoffs. To explain the behavior when agents are not in the dark, we need to modify the basic IEL model and allow some agents to begin with a good idea about how to play. We show that if the proportion of inspired agents with good ideas is chosen judiciously, the behavior of IEL agents looks remarkably similar to that of human subjects in laboratory experiments.", "doi": "10.1007/s10683-018-9568-1", "issn": "1386-4157", "publisher": "Springer", "publication": "Experimental Economics", "publication_date": "2018-09", "series_number": "3", "volume": "21", "issue": "3", "pages": "692-721" }, { "id": "authors:a6fvp-ke472", "collection": "authors", "collection_id": "a6fvp-ke472", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20191018-120435407", "type": "publication_workingpaper", "title": "Design of Tradable Permit Programs under Imprecise Measurement", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "If the measurement of production in a commons is accurate and precise, it is possible to design a tradable permit program such that, under a fairly general set of conditions, the market equilibrium is efficient for the given aggregate permit level and everyone is better off after the permit program than before. Often, however, implementation of a tradable permit system is postponed or never undertaken because an inexpensive technology able to provide accurate and precise measurements does not exist. However, there often is an inexpensive technology which accurate but not precise. I study the possibilities for the design of a tradable permit system when the measurement technology involves an imprecise, indirect measure of production that contains statistical uncertainty. To the best of my knowledge, this has not been studied before.\nAs one might expect, imprecise measurement can lead to inefficiency and prevent voluntary participation. But there are positive results. If measurement errors are proportional to use, it is possible to design so that aggregate output is efficiently allocated. Also, it is possible to calculate a set of individual firm lump-sum subsidies to attain voluntary participation.", "doi": "10.7907/a6fvp-ke472", "publisher": "California Institute of Technology", "publication_date": "2018-03-20" }, { "id": "authors:mte8a-n4r44", "collection": "authors", "collection_id": "mte8a-n4r44", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170707-110629443", "type": "publication_workingpaper", "title": "ACE: A Combinatorial Market Mechanism", "author": [ { "family_name": "Fine", "given_name": "Leslie", "clpid": "Fine-Leslie" }, { "family_name": "Goeree", "given_name": "Jacob K.", "orcid": "0000-0001-9876-3425", "clpid": "Goeree-J-K" }, { "family_name": "Ishikida", "given_name": "Tak", "clpid": "Ishikida-Takashi" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In 1990 the South Coast Air Quality Management District created a tradable emissions program to more efficiently manage the ex- tremely bad emissions in the \nLos Angeles basin. The program created 136 different assets that an environmental engineer could use to cover emissions in place of installing expensive abatement equipment. Standard markets could not deal with this complexity and little trading occurred. A new combinatorial market was created in response and operated successfully for many years. That market design, called ACE (approximate competitive equilibrium), is described in detail and its successful performance in practice is analyzed.", "doi": "10.7907/mte8a-n4r44", "publisher": "California Institute of Technology", "publication_date": "2016-11-03" }, { "id": "authors:q1t2j-eab44", "collection": "authors", "collection_id": "q1t2j-eab44", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20140425-132301397", "type": "article", "title": "Optimal Dynamic Nonlinear Income Taxes with No Commitment", "author": [ { "family_name": "Berliant", "given_name": "Marcus", "clpid": "Berliant-M" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "We wish to study optimal dynamic nonlinear income taxes. Do real-world taxes share some of their features? What policy prescriptions can be made? We study a two-period model, where the consumers and government each have separate budget constraints in the two periods, so income cannot be transferred between periods. Labor supply in both periods is chosen by consumers. The government has memory, so taxes in the first period are a function of first-period labor income, whereas taxes in the second period are a function of both first- and second-period labor incomes. The government cannot commit to future taxes. Time consistency is thus imposed as a requirement. The main results of the paper show that time-consistent incentive-compatible two-period taxes involve separation of types in the first period and a differentiated lump-sum tax in the second period, provided that the discount rate is high or utility is separable between labor and consumption. In the natural extension of the Diamond () model with quasi-linear utility functions to two periods, an equivalence of dynamic and static optimal taxes is demonstrated, and a necessary condition for the top marginal tax rate on first-period income is found.", "doi": "10.1111/jpet.12061", "issn": "1097-3923", "publisher": "Wiley", "publication": "Journal of Public Economic Theory", "publication_date": "2014-04", "series_number": "2", "volume": "16", "issue": "2", "pages": "196-221" }, { "id": "authors:jcrk9-bqz74", "collection": "authors", "collection_id": "jcrk9-bqz74", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20140410-090653513", "type": "article", "title": "The Speed of Information Revelation and Eventual Price Quality in Markets with Insiders: Comparing Two Theories", "author": [ { "family_name": "Bossaerts", "given_name": "Peter", "orcid": "0000-0003-2308-2603", "clpid": "Bossaerts-P" }, { "family_name": "Frydman", "given_name": "Cary", "clpid": "Frydman-C" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" } ], "abstract": "Two theoretical literatures, one using Bayesian Nash equilibrium (BNE), and the other using noisy rational expectations equilibrium (NREE), both provide a foundation for understanding how private information is impounded into asset prices, yet some of their predictions are conflicting. Here, we compare for the first time, the two theories using data from carefully controlled laboratory asset markets. In the dynamics, we find strong evidence for BNE theory, although final prices support predictions of the NREE theory. Finally, we document that price volatility increases when information is being impounded in prices.", "doi": "10.1093/rof/rfs049", "issn": "1572-3097", "publisher": "Oxford University Press", "publication": "Review of Finance", "publication_date": "2014-01", "series_number": "1", "volume": "18", "issue": "1", "pages": "1-22" }, { "id": "authors:4yy09-1wd81", "collection": "authors", "collection_id": "4yy09-1wd81", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20130815-092245964", "type": "article", "title": "Efficiency of continuous double auctions under individual evolutionary learning with full or limited information", "author": [ { "family_name": "Anufriev", "given_name": "Mikhail", "clpid": "Anufriev-M" }, { "family_name": "Arifovic", "given_name": "Jasmina", "orcid": "0000-0002-7092-6541", "clpid": "Arifovic-J" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" }, { "family_name": "Panchenko", "given_name": "Valentyn", "clpid": "Panchenko-V" } ], "abstract": "In this paper we explore how specific aspects of market transparency\nand agents' behavior affect the efficiency of the market outcome. In particular,\nwe are interested whether learning behavior with and without information\nabout actions of other participants improves market efficiency. We consider\na simple market for a homogeneous good populated by buyers and sellers.\nThe valuations of the buyers and the costs of the sellers are given exogenously.\nAgents are involved in consecutive trading sessions, which are organized as\na continuous double auction with order book. Using Individual Evolutionary\nLearning agents submit price bids and offers, trying to learn the most profitable\nstrategy by looking at their realized and counterfactual or \"foregone\" payoffs.\nWe find that learning outcomes heavily depend on information treatments.\nUnder full information about actions of others, agents' orders tend to be\nsimilar, while under limited information agents tend to submit their valuations/\ncosts. This behavioral outcome results in higher price volatility for the latter treatment. We also find that learning improves allocative efficiency when\ncompared to outcomes Zero-Intelligent traders.", "doi": "10.1007/s00191-011-0230-8", "issn": "0936-9937", "publisher": "Springer Verlag", "publication": "Journal of Evolutionary Economics", "publication_date": "2013-07", "series_number": "3", "volume": "23", "issue": "3", "pages": "539-573" }, { "id": "authors:y3ad7-t7p22", "collection": "authors", "collection_id": "y3ad7-t7p22", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20120927-120424918", "type": "article", "title": "Individual evolutionary learning, other-regarding preferences, and the voluntary contributions mechanism", "author": [ { "family_name": "Arifovic", "given_name": "Jasmina", "orcid": "0000-0002-7092-6541", "clpid": "Arifovic-J" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" } ], "abstract": "The data from experiments with the Voluntary Contributions Mechanism suggest five stylized facts, including the restart effect. To date, no theory has explained all of these facts simultaneously. We merge our Individual Evolutionary Learning model with a variation of heterogeneous other-regarding preferences and a distribution of types to provide a new theory that does. In addition, our theory answers some open questions concerning the data on partners\u2013strangers experiments. One interesting feature of the theory is that being a conditional cooperator is not a type but arises endogenously as a behavior. The data generated by our model are quantitatively similar to data from a variety of experiments, and experimenters, and are insensitive to moderate variations in the parameters of the model. That is, we have a robust explanation for most behavior in VCM experiments.", "doi": "10.1016/j.jpubeco.2012.05.013", "issn": "0047-2727", "publisher": "Elsevier", "publication": "Journal of Public Economics", "publication_date": "2012-10", "series_number": "9-10", "volume": "96", "issue": "9-10", "pages": "808-823" }, { "id": "authors:a0rmb-6mz52", "collection": "authors", "collection_id": "a0rmb-6mz52", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20120607-094141948", "type": "article", "title": "Individual evolutionary learning with many agents", "author": [ { "family_name": "Arifovic", "given_name": "Jasmina", "orcid": "0000-0002-7092-6541", "clpid": "Arifovic-J" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" } ], "abstract": "Individual Evolutionary Learning (IEL) is a learning model based on the evolution of a population of strategies of an individual agent. In prior work, IEL has been shown to be consistent with the behavior of human subjects in games with a small number of agents. In this paper, we examine the performance of IEL in games with many agents. We find IEL to be robust to this type of scaling. With the appropriate linear adjustment of the mechanism parameter, the convergence behavior of IEL in games induced by Groves\u2013Ledyard mechanisms in quadratic environments is independent of the number of participants.", "doi": "10.1017/S026988891200015X", "issn": "0269-8889", "publisher": "Cambridge University Press", "publication": "Knowledge Engineering Review", "publication_date": "2012-06", "series_number": "2", "volume": "27", "issue": "2", "pages": "239-254" }, { "id": "authors:chz37-kzj03", "collection": "authors", "collection_id": "chz37-kzj03", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20101206-154545200", "type": "article", "title": "Prediction Markets: Alternative Mechanisms for Complex Environments with Few Traders", "author": [ { "family_name": "Healy", "given_name": "Paul J.", "clpid": "Healy-P-J" }, { "family_name": "Linardi", "given_name": "Sera", "clpid": "Linardi-S" }, { "family_name": "Lowery", "given_name": "J. Richard", "clpid": "Lowery-J-R" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Double auction prediction markets have proven successful in large-scale applications such as elections and sporting events. Consequently, several large corporations have adopted these markets for smaller-scale internal applications where information may be complex and the number of traders is small. Using laboratory experiments, we test the performance of the double auction in complex environments with few traders and compare it to three alternative mechanisms. When information is complex we find that an iterated poll (or Delphi method) outperforms the double auction mechanism. We present five behavioral observations that may explain why the poll performs better in these settings.", "doi": "10.1287/mnsc.1100.1226", "issn": "0025-1909", "publisher": "INFORMS", "publication": "Management Science", "publication_date": "2010-11", "series_number": "11", "volume": "56", "issue": "11", "pages": "1977-1996" }, { "id": "authors:tzztv-kxd49", "collection": "authors", "collection_id": "tzztv-kxd49", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20091106-113059865", "type": "article", "title": "Using Neural Measures of Economic Value to Solve the Public Goods Free-Rider Problem", "author": [ { "family_name": "Krajbich", "given_name": "Ian", "clpid": "Krajbich-I" }, { "family_name": "Camerer", "given_name": "Colin", "orcid": "0000-0003-4049-1871", "clpid": "Camerer-C-F" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" }, { "family_name": "Rangel", "given_name": "Antonio", "clpid": "Rangel-A" } ], "abstract": "Every social group needs to decide when to provide public goods and how to allocate the costs among its members. Ideally, this decision would maximize the group's net benefits while also ensuring that every individual's benefit is greater than the cost he or she has to pay. Unfortunately, the economic theory of mechanism design has shown that this ideal solution is not feasible when the group leadership does not know the values of the individual group members for the public good. We show that this impossibility result can be overcome in laboratory settings by combining technologies for obtaining neural measures of value (functional magnetic resonance imaging\u2013based pattern classification) with carefully designed institutions that allocate costs based on both reported and neurally measured values.", "doi": "10.1126/science.1177302", "issn": "0036-8075", "publisher": "American Association for the Advancement of Science", "publication": "Science", "publication_date": "2009-10-23", "series_number": "5952", "volume": "326", "issue": "5952", "pages": "596-599" }, { "id": "authors:74cgh-0j750", "collection": "authors", "collection_id": "74cgh-0j750", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170727-150205866", "type": "publication_workingpaper", "title": "Market Design for Fishery IFQ Programs", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "I examine the impact of market design on the performance of a cap-and-trade program for Individual Fishing Quotas. In equilibrium, neither the term of the quota, the number of years for which it is valid, nor the method of initial allocation, granting or selling, has a differential effect on the protability of the shery or the quality of the environment. However, the term of the quota and the method of initialization can have a big impact on the price discovery process and whether equilibrium is attained. Because of this, both the fishery and the environment can be significantly better off with a mixture of historically based grants and auctions with some form of limited term quotas. I also discuss some additional benefits from an initialization process that generates some revenue for the public. Section 5 contains a summary.", "doi": "10.7907/74cgh-0j750", "publisher": "California Institute of Technology", "publication_date": "2009-04-02" }, { "id": "authors:1x6xs-mhe97", "collection": "authors", "collection_id": "1x6xs-mhe97", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190814-105349068", "type": "article", "title": "Introduction to the issues in honor of Leonid Hurwicz", "author": [ { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" } ], "abstract": "In my second year in graduate school in 1965, Stanley Reiter gave me copy of \"Optimality and Efficiency in Resource Allocation Processes\" published in 1959 by Leonid Hurwicz. The article had a remarkable effect on me. I knew immediately that these were the questions I went into economics to study and the precision with which I wanted to carry out that study. At the time there was no word for the area, today we call it Mechanism Design. The field and Leo's role in creating it were recognized with a Nobel Prize in 2007.", "doi": "10.1007/s10058-009-0079-6", "issn": "1434-4742", "publisher": "Springer", "publication": "Review of Economic Design", "publication_date": "2009-04", "series_number": "1-2", "volume": "13", "issue": "1-2", "pages": "1-1" }, { "id": "authors:px5xx-0hh60", "collection": "authors", "collection_id": "px5xx-0hh60", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:LEDjebo09", "type": "article", "title": "An experimental test of combinatorial information markets", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Hanson", "given_name": "Robin", "clpid": "Hanson-R" }, { "family_name": "Ishikida", "given_name": "Takashi", "clpid": "Ishikida-Takashi" } ], "abstract": "While a simple information market lets one trade on the probability of each value of a single variable, a full combinatorial information market lets one trade on any combination of values of a set of variables, including any conditional or joint probability. In laboratory experiments, we compare the accuracy of simple markets, two kinds of combinatorial markets, a call market and a market maker, isolated individuals who report to a scoring rule, and two ways to combine those individual reports into a group prediction. We consider two environments with asymmetric information on sparsely correlated binary variables, one with three subjects and three variables, and the other with six subjects and eight variables (thus 256 states).", "doi": "10.1016/j.jebo.2008.04.010", "issn": "0167-2681", "publisher": "Elsevier", "publication": "Journal of Economic Behavior & Organization", "publication_date": "2009-02", "series_number": "2", "volume": "69", "issue": "2", "pages": "182-189" }, { "id": "authors:vrtd6-e5w04", "collection": "authors", "collection_id": "vrtd6-e5w04", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:ARRsci08", "type": "article", "title": "The promise of prediction markets", "author": [ { "family_name": "Arrow", "given_name": "Kenneth J.", "clpid": "Arrow-K-J" }, { "family_name": "Forsythe", "given_name": "Robert", "clpid": "Forsythe-R" }, { "family_name": "Gorham", "given_name": "Michael", "clpid": "Gorham-M" }, { "family_name": "Hahn", "given_name": "Robert", "clpid": "Hahn-R" }, { "family_name": "Hanson", "given_name": "Robin", "clpid": "Hanson-R" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Levmore", "given_name": "Saul", "clpid": "Levmore-S" }, { "family_name": "Litan", "given_name": "Robert", "clpid": "Litan-R" }, { "family_name": "Milgrom", "given_name": "Paul", "clpid": "Milgrom-P" }, { "family_name": "Nelson", "given_name": "Forrest D.", "clpid": "Nelson-F-D" }, { "family_name": "Neumann", "given_name": "George R.", "clpid": "Neumann-G-R" }, { "family_name": "Ottaviani", "given_name": "Marco", "clpid": "Ottaviani-M" }, { "family_name": "Schelling", "given_name": "Thomas C.", "clpid": "Schelling-T-C" }, { "family_name": "Shiller", "given_name": "Robert J.", "clpid": "Shiller-R-J" }, { "family_name": "Smith", "given_name": "Vernon L.", "clpid": "Smith-V-L" }, { "family_name": "Snowberg", "given_name": "Erik", "clpid": "Snowberg-E" }, { "family_name": "Sunstein", "given_name": "Cass R.", "clpid": "Sunstein-C-R" }, { "family_name": "Tetlock", "given_name": "Paul C.", "clpid": "Tetlock-P-C" }, { "family_name": "Tetlock", "given_name": "Philip E.", "clpid": "Tetlock-P-E" }, { "family_name": "Varian", "given_name": "Hal R.", "clpid": "Varian-H-R" }, { "family_name": "Wolfers", "given_name": "Justin", "clpid": "Wolfers-J" }, { "family_name": "Zitzewitz", "given_name": "Eric", "clpid": "Zitzewitz-E" } ], "abstract": "The ability of groups of people to make predictions is a potent research tool that should be freed of unnecessary government restrictions.", "doi": "10.1126/science.1157679", "issn": "0036-8075", "publisher": "American Association for the Advancement of Science", "publication": "Science", "publication_date": "2008-05-16", "series_number": "5878", "volume": "320", "issue": "5878", "pages": "877-878" }, { "id": "authors:85p42-5cd71", "collection": "authors", "collection_id": "85p42-5cd71", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160823-155716081", "type": "book_section", "title": "Second workshop on prediction markets", "book_title": "EC '07 Proceedings of the 8th ACM conference on Electronic commerce", "author": [ { "family_name": "Chen", "given_name": "Yiling", "clpid": "Chen-Yiling" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Pennock", "given_name": "David M.", "clpid": "Pennock-D-M" }, { "family_name": "Zitzewitz", "given_name": "Eric", "clpid": "Zitzewitz-E" } ], "abstract": "The Second Workshop on Prediction Markets, following\nthe success of the first workshop held in 2005, explores research challenges in using markets as predictive devices. The workshop brings together researchers and practitioners from a variety of relevant fields, including economics, finance, computer science, and statistics, in both academia and industry, to discuss the state of the art today, and the challenges and prospects for tomorrow in the field of prediction markets.", "doi": "10.1145/1250910.1250965", "isbn": "978-1-59593-653-0", "publisher": "ACM", "place_of_publication": "New York, NY", "publication_date": "2007-06", "pages": "361-362" }, { "id": "authors:p1ac3-63b20", "collection": "authors", "collection_id": "p1ac3-63b20", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20100924-090411858", "type": "article", "title": "A general characterization of interim efficient mechanisms for independent linear environments", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "We consider the class of Bayesian environments with independent types, and utility functions which are both quasi-linear in a private good and linear in a one-dimensional private-value type parameter. We call these independent linear environments. For these environments, we fully characterize interim efficient allocation rules which satisfy interim incentive compatibility and interim individual rationality constraints. We also prove that they correspond to decision rules based on virtual surplus maximization, together with the appropriate incentive taxes. We illustrate these techniques with applications to auction design and public good provision.", "doi": "10.1016/j.jet.2005.12.006", "issn": "0022-0531", "publisher": "Elsevier", "publication": "Journal of Economic Theory", "publication_date": "2007-03", "series_number": "1", "volume": "133", "issue": "1", "pages": "441-466" }, { "id": "authors:zt1gv-9wb06", "collection": "authors", "collection_id": "zt1gv-9wb06", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20100924-103442954", "type": "book_section", "title": "Optimal Combinatoric Auctions with Single-Minded Bidders", "book_title": "Proceedings of the 8th ACM conference on Electronic commerce", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Combinatoric auctions sell K objects to N people who have preferences defined on subsets of the items. The optimal auction satisfies incentive compatibility (it is a dominant strategy to report true values), voluntary participation (bidders are not worse off through participation) and maximizes the expected revenue of the auctioneer among such auctions. In this paper, the optmal auction is characterized for the special case of single-minded bidders. It is shown that the optimal auction is not a Vickrey-Clarke-Groves mechanism. The optimal auction uses pivot prices, as in VCG, but it also uses bidder preferences. An example is provided showing improvement over the VCG mechanism can be large. The example also illustrates that auctions that are efficient or in the core are not optimal.", "doi": "10.1145/1250910.1250945", "isbn": "978-1-59593-653-0", "publisher": "Association for Computing Machinery", "publication_date": "2007", "pages": "237-242" }, { "id": "authors:tt5da-rj571", "collection": "authors", "collection_id": "tt5da-rj571", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20110726-142105653", "type": "book_section", "title": "A pricing mechanism which implements in Nash equilibria a rate allocation problem in networks", "book_title": "Proceedings of the 45th IEEE Conference on Decision and Control", "author": [ { "family_name": "Stoenescu", "given_name": "Tudor M.", "clpid": "Stoenescu-T-M" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "We present a pricing mechanism which implements\nin Nash equilibria a rate allocation problem in unicast\nservice provisioning. This mechanism is different from the ones\nwhich appear in the existing literature since it accounts for\nthe strategic behavior of individual users and achieves efficient\nallocations. We provide some insight on how one may generalize\nour mechanism, and we determine a particular network structure\nunder which this mechanism is informationally efficient.", "doi": "10.1109/CDC.2006.377177", "isbn": "978-1-4244-0170-3", "publisher": "IEEE", "place_of_publication": "Piscataway, NJ", "publication_date": "2006", "pages": "1270-1277" }, { "id": "authors:3tt2k-7b362", "collection": "authors", "collection_id": "3tt2k-7b362", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170814-080712373", "type": "article", "title": "A New and Improved Design for Multiobject Iterative Auctions", "author": [ { "family_name": "Kwasnica", "given_name": "Anthony M.", "clpid": "Kwasnica-A-M" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "Dave", "orcid": "0000-0002-4219-3782", "clpid": "Porter-D" }, { "family_name": "DeMartini", "given_name": "Christine", "clpid": "DeMartini-C" } ], "abstract": "In this paper we present a new improved design for multiobject auctions and report on the results of experimental tests of that design. We merge the better features of two extant but very different auction processes, the Simultaneous Multiple Round (SMR) design used by the FCC to auction the electromagnetic spectrum and the Adaptive User Selection Mechanism (AUSM) of Banks et al. (1989, \"Allocating uncertain and unresponsive resources: An experimental approach,\" RAND Journal of Economics, Vol. 20, No. 1, pp. 1\u201325). Then, by adding one crucial new feature, we are able to create a new design, the Resource Allocation Design (RAD) auction process, which performs better than both. Our experiments demonstrate that the RAD auction achieves higher efficiencies, lower bidder losses, higher net revenues, and faster times to completion without increasing the complexity of a bidder's problem.", "doi": "10.1287/mnsc.1040.0334", "issn": "0025-1909", "publisher": "INFORMS", "publication": "Management Science", "publication_date": "2005-03", "series_number": "3", "volume": "51", "issue": "3", "pages": "419-434" }, { "id": "authors:fwfvf-9g770", "collection": "authors", "collection_id": "fwfvf-9g770", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170731-152920042", "type": "publication_workingpaper", "title": "A General Characterization of Interim Efficient Mechanisms for Independent Linear Environments", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "We consider the class of Bayesian environments with independent types, and utility functions which are both quasi-linear in a private good and linear in a one-dimensional private-value type parameter. We call these independent linear environments. For these environments, we fully characterize interim efficient allocation rules which satisfy interim incentive compatibility and interim individual rationality constraints. We also prove that they correspond to decision rules based on virtual surplus maximization, together with the appropriate incentive taxes. We demonstrate how these techniques can be applied easily to the design of auctions, markets, bargaining rules, public good provision, and assignment problems.", "doi": "10.7907/fwfvf-9g770", "publisher": "California Institute of Technology", "publication_date": "2003-11-18" }, { "id": "authors:wa49w-k3z81", "collection": "authors", "collection_id": "wa49w-k3z81", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20161121-165809588", "type": "book_section", "title": "Baby bond connect: software for combined value trading", "book_title": "EC '03 Proceedings of the 4th ACM conference on Electronic commerce", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Lin", "given_name": "John C.", "orcid": "0000-0003-2794-184X", "clpid": "Lin-John-C" } ], "contributor": [ { "family_name": "Menasce", "given_name": "Danny", "clpid": "Menasce-D" } ], "abstract": "BabyBondConnect (BBC) is a software package for trading goods with combined-value in a call market. The software was developed at Caltech under the direction of Dr. John O. Ledyard.\n\nThe poster session will explain in detail the problem of trading combined-value goods, the mechanism used by BBC, and the technical specification of the software package. The poster will suggest further development of the BBC software package, the role software engineering and experimental economics can play in understanding traditional markets and electronic markets, and how new market mechanisms can be developed and tested.", "doi": "10.1145/779928.779996", "isbn": "1-58113-679-X", "publisher": "ACM", "place_of_publication": "New York, NY", "publication_date": "2003-06", "pages": "275" }, { "id": "authors:g3k5j-reg22", "collection": "authors", "collection_id": "g3k5j-reg22", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20161208-130503388", "type": "book_section", "title": "The policy analysis market: an electronic commerce application of a combinatorial information market", "book_title": "EC '03 Proceedings of the 4th ACM conference on Electronic commerce", "author": [ { "family_name": "Polk", "given_name": "Charles", "clpid": "Polk-C" }, { "family_name": "Hanson", "given_name": "Robin", "clpid": "Hanson-R" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" }, { "family_name": "Ishikida", "given_name": "Takashi", "clpid": "Ishikida-Takashi" } ], "contributor": [ { "family_name": "Menasce", "given_name": "Danny", "clpid": "Menasce-D" } ], "abstract": "[no abstract]", "doi": "10.1145/779928.779994", "isbn": "1-58113-679-X", "publisher": "ACM", "place_of_publication": "New York, NY", "publication_date": "2003-06", "pages": "272-273" }, { "id": "authors:azktr-6jc27", "collection": "authors", "collection_id": "azktr-6jc27", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171106-141307390", "type": "article", "title": "The First Use of a Combined-Value Auction for Transportation Services", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Olson", "given_name": "Mark A.", "clpid": "Olson-M-A" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" }, { "family_name": "Swanson", "given_name": "Joseph A.", "clpid": "Swanson-J-A" }, { "family_name": "Torma", "given_name": "David P.", "clpid": "Torma-D-P" } ], "abstract": "Combined-value auctions (CVAs) allow participants to make an offer of a single amount for\na collection of items. These auctions provide value to both buyers and sellers of goods or\nservices in a number of environments, but they have rarely been implemented, perhaps because\nof lack of knowledge and experience. Sears Logistics Services (SLS) is the first procurer\nof trucking services to use a CVA to reduce its costs. In 1993, it saved 13 percent over past\nprocurement practices. Experimental economics played a crucial role in the development, sale,\nand use of the CVA.", "doi": "10.1287/inte.32.5.4.30", "issn": "1526-551X", "publisher": "INFORMS", "publication": "Interfaces", "publication_date": "2002-10-01", "series_number": "5", "volume": "32", "issue": "5", "pages": "4-12" }, { "id": "authors:bq1aa-0q222", "collection": "authors", "collection_id": "bq1aa-0q222", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170809-145541198", "type": "article", "title": "Inducing liquidity in thin financial markets through combined-value trading mechanisms", "author": [ { "family_name": "Bossaerts", "given_name": "Peter", "orcid": "0000-0003-2308-2603", "clpid": "Bossaerts-P" }, { "family_name": "Fine", "given_name": "Leslie", "clpid": "Fine-Leslie" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" } ], "abstract": "Asset pricing theory hypothesizes that investors are only interested in portfolios; individual securities are evaluated only in terms of their contribution to portfolio risk and return. Yet, standard financial market design is that of parallel, unconnected markets, whereby investors cannot submit orders in one market conditional on events in others. When markets are thin, this exposes them to substantial execution risk. Fear of ending up with unbalanced portfolios after trading may even keep investors from submitting orders, further eroding liquidity and the ability of markets to equilibrate. The suggested solution is a portfolio trading mechanism referred to as combined-value trading (CVT). Investors are allowed to submit orders for packages of securities and the system matches trades and computes prices by optimally combining portfolio orders in an open book. We study the performance of the CVT mechanism experimentally and compare it to the performance of parallel, unconnected double auctions in experiments with similar parametrization and either a similar number of subjects or substantially thicker markets. We present evidence that our portfolio trading mechanism facilitates equilibration to the extent that the thicker markets do. Inspection of order submission and trade activity reveals that subjects manage to exploit the direct linkages between markets enabled by the CVT system.", "doi": "10.1016/S0014-2921(02)00240-4", "issn": "0014-2921", "publisher": "Elsevier", "publication": "European Economic Review", "publication_date": "2002-10", "series_number": "9", "volume": "46", "issue": "9", "pages": "1671-1695" }, { "id": "authors:cx6jf-szm80", "collection": "authors", "collection_id": "cx6jf-szm80", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170809-132004799", "type": "article", "title": "The First Use of a Combined-Value Auction for Transportation Services", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Olson", "given_name": "Mark", "clpid": "Olson-M" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" }, { "family_name": "Swanson", "given_name": "Joseph A.", "clpid": "Swanson-J-A" }, { "family_name": "Torma", "given_name": "David P.", "clpid": "Torma-D-P" } ], "abstract": "Combined-value auctions (CVAs) allow participants to make an offer of a single amount for a collection of items. These auctions provide value to both buyers and sellers of goods or services in a number of environments, but they have rarely been implemented, perhaps because of lack of knowledge and experience. Sears Logistics Services (SLS) is the first procurer of trucking services to use a CVA to reduce its costs. In 1993, it saved 13 percent over past procurement practices. Experimental economics played a crucial role in the development, sale, and use of the CVA.", "doi": "10.1287/inte.32.5.4.30", "issn": "0092-2102", "publisher": "Informs", "publication": "Interfaces", "publication_date": "2002-09", "series_number": "5", "volume": "32", "issue": "5", "pages": "4-12" }, { "id": "authors:qrk3b-cfk59", "collection": "authors", "collection_id": "qrk3b-cfk59", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160303-152243404", "type": "article", "title": "The approximation of efficient public good mechanisms by simple voting schemes", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "This paper compares the performance of simple voting rules, called referenda, to the performance of interim efficient mechanisms for the provision of a public good. In a referendum, voters simply vote for or against the provision of the public good, and production of the public good depends on whether or not the number of yes votes exceeds a prespecified threshold. Costs are shared equally. We show that in large populations for any interim efficient allocation rule, there exists a corresponding referendum that yields approximately the same total welfare when there are many individuals. Moreover, if there is a common value component to the voters' preferences, then there is a unique approximating referendum.", "doi": "10.1016/S0047-2727(00)00161-4", "issn": "0047-2727", "publisher": "Elsevier", "publication": "Journal of Public Economics", "publication_date": "2002-02", "series_number": "2", "volume": "83", "issue": "2", "pages": "153-171" }, { "id": "authors:ncrm5-t7v27", "collection": "authors", "collection_id": "ncrm5-t7v27", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200512-094205367", "type": "book_section", "title": "Concurrent trading in two experimental markets with demand interdependence", "book_title": "Advances in Experimental Markets", "author": [ { "family_name": "Williams", "given_name": "Arlington W.", "clpid": "Williams-A-W" }, { "family_name": "Smith", "given_name": "Vernon L.", "clpid": "Smith-V-L" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Gjerstad", "given_name": "Steven", "clpid": "Gjerstad-S" } ], "contributor": [ { "family_name": "Cason", "given_name": "Timothy", "clpid": "Cason-T-N" }, { "family_name": "Noussair", "given_name": "Charles", "clpid": "Noussair-C-N" } ], "abstract": "We report results from fifteen computerized double auctions with concurrent trading of two commodities. In contrast to prior experimental markets, buyers' demands are induced via CES earnings functions defined over the two traded goods, with a fiat money expenditure constraint. Sellers receive independent marginal cost arrays for each commodity. Parameters for buyers\" earnings functions and sellers' costs are set to yield a stable, competitive equilibrium. In spite of the complexity introduced by the demand interdependence, the competitive model is a good predictor of market outcomes, although prices tend to be above (below) the competitive prediction in the low-price (high-price) market.", "doi": "10.1007/978-3-642-56448-2_2", "isbn": "978-3-642-62657-9", "publisher": "Springer", "place_of_publication": "Berlin", "publication_date": "2001", "pages": "15-32" }, { "id": "authors:j8m8y-vxn95", "collection": "authors", "collection_id": "j8m8y-vxn95", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170809-142725559", "type": "book_section", "title": "Experimental testbedding of a pollution trading system: Southern California's RECLAIM emissions market", "book_title": "Research in Experimental Economics", "author": [ { "family_name": "Ishikida", "given_name": "Takashi", "clpid": "Ishikida-Takashi" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" }, { "family_name": "Olson", "given_name": "Mark", "clpid": "Olson-M" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" } ], "contributor": [ { "family_name": "Isaac", "given_name": "R. M.", "clpid": "Isaac-R-M" } ], "abstract": "The efficient management of air quality through the use of pollution emissions trading systems is not a new idea (see Montgomery (1972)). However, the implementation of such systems is new. The design of the pollution permits being exchanged and the market in which the permits are traded requires the integration of environmental economics, game theory, operations research and experimental testing (see Ledyard (1993)). This chapter reports on experiments that were used to help design and testbed a novel pollution trading system used in Southern California. This system allows participants to trade two pollutants (nitrogen and sulfur oxides \u2013 NOx and SOx) across two zones (upwind and downwind) over 9 years separate years (1994-2003). The complexity associated with such an interdependent system of commodities makes the design of the trading system challenging. Testbedding new systems is standard fare in engineering but only recently has been applied to economics through the use of experiments (see Plott (1994)). Unlike experiments designed to test specific theories of behavior, testbedding is used when theory supplies little design advice and when the process is relatively new and there is no experience.", "doi": "10.1016/S0193-2306%2801%2908009-7", "isbn": "978-0-76230-702-9", "publisher": "Emerald Group", "place_of_publication": "Bingley, England", "publication_date": "2001", "pages": "185-220" }, { "id": "authors:v811f-scj07", "collection": "authors", "collection_id": "v811f-scj07", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170808-142250579", "type": "publication_workingpaper", "title": "The Approximation of Efficient Public Good Mechanisms by Simple Voting Schemes", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "This paper compares the performance of simple voting rules, called referenda, to the performance of interim efficient mechanisms for the provision of a public good. In a referendum, voters simply vote for or against the provision of the public good, and production of the public good depends on whether or not the number of yes votes exceeds a prespecified threshold. Costs are shared equally. We show that in large populations for any interim efficient allocation rule, there exists a corresponding referendum that yields approximately the same total welfare when there are many individuals. Moreover, if there is a common value component to the voters' preferences, then there is a unique approximating referendum.", "doi": "10.7907/v811f-scj07", "publisher": "California Institute of Technology", "publication_date": "2000-10-12" }, { "id": "authors:yk4m6-yrv98", "collection": "authors", "collection_id": "yk4m6-yrv98", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170808-135334937", "type": "publication_workingpaper", "title": "Inducing Liquidity in Thin Financial Markets through Combined-Value Trading Mechanisms", "author": [ { "family_name": "Bossaerts", "given_name": "Peter", "orcid": "0000-0003-2308-2603", "clpid": "Bossaerts-P" }, { "family_name": "Fine", "given_name": "Leslie", "clpid": "Fine-Leslie" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Previous experimental research has shown that thin financial markets fail to fully equilibrate, in contrast with thick markets. A specific type of market risk is conjectured to be the reason, namely, the risk of partial execution of desired portfolio rearrangements in a system of parallel, unconnected double auction markets. This market risk causes liquidity to dry up before equilibrium is reached. To verify the conjecture, we organized markets directly as a portfolio trading mechanism, allowing agents to better coordinate their orders across securities. The mechanism is an implementation of the combined-value trading (CVT) system. We present evidence that our portfolio trading mechanism facilitates equilibration to the same extent as thick markets do. Like in thick markets, the emergence of equilibrium pricing cannot be attributed to chance. Inspection of order submission and trade activity reveals that subjects manage to exploit the direct linkages between markets presented by the CVT system.", "doi": "10.7907/yk4m6-yrv98", "publisher": "California Institute of Technology", "publication_date": "2000-08" }, { "id": "authors:txk4w-c9032", "collection": "authors", "collection_id": "txk4w-c9032", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170808-140630427", "type": "publication_workingpaper", "title": "Experimental Testbedding of a Pollution Trading System: Southern California's RECLAIM Emissions Market", "author": [ { "family_name": "Ishikida", "given_name": "Takashi", "clpid": "Ishikida-Takashi" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Olson", "given_name": "Mark A.", "clpid": "Olson-M-A" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" } ], "abstract": "[No abstract]", "doi": "10.7907/txk4w-c9032", "publisher": "California Institute of Technology", "publication_date": "2000-03" }, { "id": "authors:1xbgs-71j14", "collection": "authors", "collection_id": "1xbgs-71j14", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170808-141429666", "type": "publication_workingpaper", "title": "The First Use of a Combined Value Auction for Transportation Services", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Olson", "given_name": "Mark A.", "clpid": "Olson-M-A" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" }, { "family_name": "Swanson", "given_name": "Joseph A.", "clpid": "Swanson-J-A" }, { "family_name": "Torma", "given_name": "David P.", "clpid": "Torma-D-P" } ], "abstract": "Sears, Roebuck and Co. is one of the largest procurers of trucking services in the world through its wholly-owned subsidiary, Sears Logistics Services (SLS). SLS controls supply chain elements that originate at the vendor (manufacturer) through distribution centers to retail stores, and from vendor to distribution centers to cross dock facilities. This case examines a major change in the method Sears used in contracting for truckload carrier services for this supply chain. It provides a pioneering example of complex business to business e-Commerce.", "doi": "10.7907/1xbgs-71j14", "publisher": "California Institute of Technology", "publication_date": "2000-03" }, { "id": "authors:mb1ry-eq461", "collection": "authors", "collection_id": "mb1ry-eq461", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170824-093443025", "type": "article", "title": "Mutually Destructive Bidding: The FCC Auction Design Problem", "author": [ { "family_name": "Bykowsky", "given_name": "Mark M.", "clpid": "Bykowsky-M-M" }, { "family_name": "Cull", "given_name": "Robert J.", "clpid": "Cull-R-J" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In general, synergies across license valuations complicate the auction design process. Theory suggests that a \"simple\" (i.e., non-combinatorial) auction will have difficulty in assigning licenses efficiently in such an environment. This difficulty increases with increases in \"fitting complexity.\" In some environments, bidding may become \"mutually destructive.\" Experiments indicate that a properly designed combinatorial auction is superior to a simple auction in terms of economic efficiency and revenue generation in bidding environments with a low amount of fitting complexity. Concerns that a combinatorial auction will cause a \"threshold\" problem are not borne out when bidders for small packages can communicate.", "doi": "10.1023/A:1008122015102", "issn": "0922-680X", "publisher": "Springer", "publication": "Journal of Regulatory Economics", "publication_date": "2000", "series_number": "3", "volume": "17", "issue": "3", "pages": "205-228" }, { "id": "authors:wve8f-fxz97", "collection": "authors", "collection_id": "wve8f-fxz97", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170810-170308555", "type": "publication_workingpaper", "title": "A New and Improved Design for Multi-Object Iterative Auctions", "author": [ { "family_name": "DeMartini", "given_name": "Christine", "clpid": "DeMartini-C" }, { "family_name": "Kwasnica", "given_name": "Anthony M.", "clpid": "Kwasnica-A-M" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" } ], "abstract": "In this paper we present a new improved design for multi-object auctions and report on the results of tests of that design. We merge the better features of two extant but very different auction processes, the Milgrom FCC design (see Milgrom (1995)) and the Adaptive User Selection Mechanism (AUSM) of Banks et al. (1989)). Then, by adding one crucial new feature, we are able to create a new design, the Resource Allocation Design (RAD) auction process, which performs better than both. We are able to demonstrate, in both simple and complex environments, that the RAD auction achieves higher efficiencies, lower bidder losses, and faster times to completion without increasing the complexity of a bidder's problem.", "doi": "10.7907/wve8f-fxz97", "publisher": "California Institute of Technology", "publication_date": "1999-09" }, { "id": "authors:s3es9-dad66", "collection": "authors", "collection_id": "s3es9-dad66", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160308-110828694", "type": "article", "title": "Interim Efficiency in a Public Goods Problem", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "contributor": [ { "family_name": "d Aspremont", "given_name": "C" } ], "abstract": "IN THIS PAPER, WE CONSIDER the following classical public goods problem. A group of individuals must decide on a level of a public good that is produced according to constant returns to scale up to some capacity constraint. In addition to deciding the level of public good, the group must decide how to tax the individuals in the group in order to cover the cost. The distribution of the burden of taxation is important because different individuals have different marginal rates of substitution between the private good taxes and the public good, and may have different incomes as well. These individual marginal rates of substitution are private information; that is, each individual knows his or her own marginal rate of substitution, but not those of the other members of the group. Adopting a Bayesian mechanism design framework, we assume that the distribution of marginal rates of substitution is common knowledge.", "doi": "10.1111/1468-0262.00028", "issn": "1468-0262", "publisher": "Econometric Society", "publication": "Econometrica", "publication_date": "1999-03", "series_number": "2", "volume": "67", "issue": "2", "pages": "435-448" }, { "id": "authors:ws948-y7219", "collection": "authors", "collection_id": "ws948-y7219", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160307-164134782", "type": "article", "title": "A Characterization of Interim Efficiency with Public Goods", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "In this paper, we consider the following classical public goods problem. A group of individuals must decide on a level of public good that is produced according to constant returns to scale up to some capacity constraint. In addition to deciding the level of public good, the group must decide how to tax the individuals in the group in order to cover the cost. The distribution of the burden of taxation is important because different individuals have different marginal rates of substitution between the private good (taxes) and the public good, and may have different incomes as well. These individual marginal rates of substitution are private information; that is, each individual knows his or her own marginal rate of substitution, but not those of the other members of the group. Adopting a Bayesian mechanism design framework, we assume that the distribution of marginal rates of substitution is common knowledge.", "doi": "10.1111/1468-0262.00028", "issn": "1468-0262", "publisher": "Econometric Society", "publication": "Econometrica", "publication_date": "1999-02", "series_number": "2", "volume": "67", "issue": "2", "pages": "435-448" }, { "id": "authors:060gj-fe391", "collection": "authors", "collection_id": "060gj-fe391", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171106-161520759", "type": "article", "title": "Repeated Implementation", "author": [ { "family_name": "Kalai", "given_name": "Ehud", "clpid": "Kalai-E" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In the traditional static implementation literature it is often impossible for implementors to enforce their optimal outcomes. And when restricting the choice to dominant-strategy implementation, only the dictatorial choices of one of the participants are implementable. Repeated implementation problems are drastically different. This paper provides a strong implementation \"folk theorem:\" for patient implementors, every outcome function they care about is dominant-strategy implementable.", "doi": "10.1006/jeth.1997.2459", "issn": "0022-0531", "publisher": "Elsevier", "publication": "Journal of Economic Theory", "publication_date": "1998-12", "series_number": "2", "volume": "83", "issue": "2", "pages": "308-317" }, { "id": "authors:r2944-rm514", "collection": "authors", "collection_id": "r2944-rm514", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170818-151840242", "type": "publication_workingpaper", "title": "Mutually Destructive Bidding: The FCC Auction Design Problem", "author": [ { "family_name": "Bykowsky", "given_name": "Mark. M", "clpid": "Bykowsky-M-M" }, { "family_name": "Cull", "given_name": "Robert J.", "clpid": "Cull-R-J" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Dissatisfaction with previous assignment mechanisms and the desire to raise revenue induced Congress to grant the FCC authority to auction radio licenses. The debate over an appropriate auction design was wide ranging with many imaginative proposals. Many of the arguments and their scientific support are unfortunately not publicly available. Here, we present our side of this debate for the record.\nSynergies across license valuations complicate the auction design process. Theory suggests that a \"simple\" (i.e., non-combinatorial) auction will have difficulty in assigning licenses efficiently in such an environment. This difficulty increases with increases in \"fitting complexity.\" In some environments, bidding may become \"mutually destructive.\" Experiments indicate that a combinatorial auction is superior to a simple auction in terms of economic efficiency and revenue generation in bidding environments with a low amount of fitting complexity. Concerns that a combinatorial auction will cause a \"threshold\" problem are not borne out when bidders for small packages can communicate.", "doi": "10.7907/r2944-rm514", "publisher": "California Institute of Technology", "publication_date": "1998-06" }, { "id": "authors:b7sbx-5k980", "collection": "authors", "collection_id": "b7sbx-5k980", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170811-163520727", "type": "publication_workingpaper", "title": "Repeated Implementation", "author": [ { "family_name": "Kalai", "given_name": "Ehud", "clpid": "Kalai-E" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In the traditional static implementation literature it is often impossible for implementors to enforce their optimal outcomes. And when restricting the choice to dominant-strategy implementation, only the dictatorial choices of one of the participants are implementable.\n\nRepeated implementation problems are drastically different. This paper provides a strong implementation \"folk theorem\": for patient implementors, every outcome function they care about is dominant-strategy implementable.", "doi": "10.7907/b7sbx-5k980", "publisher": "California Institute of Technology", "publication_date": "1998-03" }, { "id": "authors:xrgsy-bp998", "collection": "authors", "collection_id": "xrgsy-bp998", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170830-083453392", "type": "article", "title": "Experiments Testing Multiobject Allocation Mechanisms", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" }, { "family_name": "Rangel", "given_name": "Antonio", "clpid": "Rangel-A" } ], "abstract": "This paper reports the results of over 130 auctions conducted under controlled conditions to examine the robustness of several auction mechanisms to allocate multiple objects. The simultaneous discrete auction process used by the Federal Communications Commission to allocate Personal Communications licenses was contrasted with a sequential auction and a combinatorial auction over a variety of demand conditions. In test environments created to check only the minimum competency of the procedures, the simultaneous discrete auction process produces highly efficient allocations, approaching levels similar to those found with a continuous form of the auction, and it outperforms a sequential auction. However, in environments created to stress test the procedures, a combinatorial auction outperforms the simultaneous discrete auction.", "doi": "10.1111/j.1430-9134.1997.00639.x", "issn": "1058-6407", "publisher": "Wiley", "publication": "Journal of Economics and Management Strategy", "publication_date": "1997-09", "series_number": "3", "volume": "6", "issue": "3", "pages": "639-675" }, { "id": "authors:y319s-0vv88", "collection": "authors", "collection_id": "y319s-0vv88", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170816-164222869", "type": "publication_workingpaper", "title": "Interim Efficiency in a Public Goods Problem", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "We consider a Bayesian public goods environment with independent private valuations, where a public good can be produced at constant returns to scale, up to some capacity. We fully characterize the interim efficient allocation rules and prove that they correspond to decision rules based on a virtual cost-benefit criterion, together with the appropriate incentive taxes. Compared to the classical Lindahl-Samuelson solution there are generally distortions that depend on the welfare weights because the efficient way to reduce the tax burden on low-valuation (resp: high-valuation) types is to reduce (resp: increase) the level of provision of the public good. Second, we explore the implementation of efficient allocations by means of simple, dominant strategy voting rules, called referenda. In a referendum, individuals vote for or against production of the public good. If a sufficiently large fraction vote in favor, the good is provided at maximum capacity and costs are distributed equally across the population. Otherwise the good is not produced. We prove that for each interim efficient allocation rule there exists a referendum that approximates that achieves the same total surplus in large populations. Furthermore, if there is common value uncertainty in addition to the private valuations uncertainty, then the approximately optimal referendum is unique.", "doi": "10.7907/y319s-0vv88", "publisher": "California Institute of Technology", "publication_date": "1997-06" }, { "id": "authors:fbfjy-wpv78", "collection": "authors", "collection_id": "fbfjy-wpv78", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170821-150043264", "type": "article", "title": "The allocation of a shared resource within an organization", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Noussair", "given_name": "Charles", "clpid": "Noussair-C-N" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" } ], "abstract": "Many resources such as supercomputers, legal advisors, and university classrooms are shared by many members of an organization. When the supply of shared resources is limited, conflict usually results between contending demanders. If these conflicts can be adequately resolved, then value is created for the organization. In this paper we use the methodology of applied mechanism design to examine alternative processes for the resolution of such conflicts for a particular class of scheduling problems. We construct a laboratory environment, within which we evaluate the outcomes of various allocation mechanisms. In particular, we are able to measure efficiency, the value attained by the resulting allocations as a percentage of the maximum possible value. Our choice of environment and parameters is guided by a specific application, the allocation of time on NASA's Deep Space Network, but the results also provide insights relevant to other scheduling and allocation applications. We find (1) experienced user committees using decision support algorithms produce reasonably efficient allocations in lower conflict situations but perform badly when there is a high level of conflict between demanders, (2) there is a mechanism, called the Adaptive User Selection Mechanism (AUSM), which charges users for time and yields high efficiencies in high conflict situations but, because of the prices paid, in which the net surplus available to the users is less than that resulting from the inefficient user committee (a reason why users may not appreciate 'market solutions' to organization problems) and (3) there is a modification of AUSM in which tokens, or internal money, replaces real money, which results in highly efficient allocations without extracting any of the users' surplus. Although the distribution of surplus is still an issue, the significant increase in efficiency provides users with a strong incentive to replace inefficient user committees with the more efficient AUSM.", "doi": "10.1007/BF02499132", "issn": "0928-5040", "publisher": "Springer", "publication": "Economic Design", "publication_date": "1996-12", "series_number": "1", "volume": "2", "issue": "1", "pages": "163-192" }, { "id": "authors:gm6hb-ngh92", "collection": "authors", "collection_id": "gm6hb-ngh92", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170830-141350613", "type": "article", "title": "Political competition in a model of economic growth: Some theoretical results", "author": [ { "family_name": "Boylan", "given_name": "Richard T.", "clpid": "Boylan-R-T" }, { "family_name": "Ledyard", "given_name": "John", "clpid": "Ledyard-J-O" }, { "family_name": "McKelvey", "given_name": "Richard D.", "clpid": "McKelvey-R-D" } ], "abstract": "We analyze the role of political competition on the type of economic policies that are selected in a one sector model of economic growth. We identify conditions under which neoclassical optimal growth plans occur, and conditions in which political business cycles occur. We find that the ability commit to multiperiod economic policy leads to less political stability of economic plans.", "doi": "10.1007/BF01213902", "issn": "0938-2259", "publisher": "Springer", "publication": "Economic Theory", "publication_date": "1996-06", "series_number": "2", "volume": "7", "issue": "2", "pages": "191-205" }, { "id": "authors:6ehr5-jww49", "collection": "authors", "collection_id": "6ehr5-jww49", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170815-163214049", "type": "publication_workingpaper", "title": "The Results of Some Tests of Mechanism Designs for the Allocation and Pricing of Collections of Heterogeneous Items", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" }, { "family_name": "Rangel", "given_name": "Antonio", "clpid": "Rangel-A" } ], "abstract": "During the discussion and evaluation of proposals for the design of the Federal Communications Commission (FCC) mechanism to sell the spectrum, over 130 auctions were run under controlled conditions at Caltech for the National Telecommunications and Information Administration (NTIA), the FCC and others. In this paper we look at these data and try to extract some useful findings for those who may be involved in creating future designs of similar auctions. For those whose experience with experimental economics methodology is limited, we begin with a section on the general framework within which experimental work underlying applied mechanism design is conducted. Next we cover, in section 2, the various technical pieces needed to understand the data: performance measures, economic environments, mechanisms tested, and the major issues considered. The experimental data are presented and our observations are summarized in section 3. We end, in section 4, with some thoughts for future work and with the observation that there is a huge gap between, theory, scientific evidence, and practice in the design of complex auctions. Much needed research remains to be done.", "doi": "10.7907/6ehr5-jww49", "publisher": "California Institute of Technology", "publication_date": "1996-03" }, { "id": "authors:y3bpp-z6d86", "collection": "authors", "collection_id": "y3bpp-z6d86", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170707-150810359", "type": "article", "title": "Introduction", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "This special issue of Games and Economic Behavior is devoted to what we call experimental game theory, and the intention is threefold. First, we want 10 provide a window into one of the exciting new areas in game theoretic research. Second, we try to collect in one place some of the best current work that spans many of the interesting topics currently being studied. Third, we hope to encourage more game theorists to think about the behavioral and empirical content of their models, particularly in relation to data from carefully controlled laboratory experiments. The belief is that theory and experiment do not develop independently and the expectation is that better interaction will ultimately lead to both better theory and better experiment.", "doi": "10.1006/game.1995.1022", "issn": "0899-8256", "publisher": "Elsevier", "publication": "Games and Economic Behavior", "publication_date": "1995-07", "series_number": "1", "volume": "10", "issue": "1", "pages": "1-5" }, { "id": "authors:6w2tn-cpt82", "collection": "authors", "collection_id": "6w2tn-cpt82", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171107-163442067", "type": "book_section", "title": "Public Goods: A Survey of Experimental Research", "book_title": "The Handbook of Experimental Economics", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "contributor": [ { "family_name": "Kagel", "given_name": "John H.", "clpid": "Kagel-J-H" }, { "family_name": "Roth", "given_name": "Alvin E.", "clpid": "Roth-A-E" } ], "abstract": "Environments with public goods are a wonderful playground for those interested in delicate experimental problems, serious theoretical challenges, and difficult mechanism design issues. In this chapter I will look at one small but fundamental part of the rapidly expanding experimental research. In Section 1, I describe a very simple public good experiment - what it is, what some theories predict, what usually happens, and why we should care - and then provide a methodological and theoretical background for the rest of the chapter. In Section 2, I look at the fundamental question: are people selfish or cooperative in volunteering to contribute to public good production? We look at five important early experiments that have laid the foundations for much that has followed. In Section 3, I look at the range of experimental research which tries to identify and study those factors which increase cooperation. In order to help those new to experimental work I have tried to focus on specific experimental designs in Section 2 and on general results and knowledge in Section 3. The reader will find that the public goods environment is a very sensitive one with much that can affect outcomes but are difficult to control. The many factors interact with each other in unknown ways. Nothing is known for sure. Environments with public goods present a serious challenge even to skilled experimentalists and many opportunities for imaginative work.", "isbn": "9780691042909", "publisher": "Princeton University Press", "place_of_publication": "Princeton", "publication_date": "1995-05", "pages": "111-194" }, { "id": "authors:rgkfq-awr86", "collection": "authors", "collection_id": "rgkfq-awr86", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170822-135920548", "type": "publication_workingpaper", "title": "First Best Bayesian Privatization Mechanisms", "author": [ { "family_name": "Dudek", "given_name": "R.", "clpid": "Dudek-R" }, { "family_name": "Kim", "given_name": "Taesung", "clpid": "Kim-Taesung" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "A planner is interested in designing an ex-post efficient, individually rational, Bayesian mechanism for allocating a single indivisible object to one of the agents who knows his own valuation and only the distribution of other agents' valuations of the object. In this paper, we show that it is impossible to design such a mechanism without any transfers among agents and the planner. However, we discover and describe an ex-post efficient, ex-post individually rational, Bayesian mechanism which balances transfers among agents without any payment to (or from) the planner.\nOur result that an ex-post efficient, ex-post individually rational, transfer balanced, Bayesian mechanism exists, is in stark contrast to two well-known impossibility results in the literature; the nonexistence of a Bayesian public good mechanism satisfying expost efficiency, individual rationality and budget balance (Laffont and Maskin (1979)) and the impossibility of an ex-post efficient, individually rational, Bayesian bilateral trading mechanism between a seller and a buyer without an outside subsidy (Myerson and Satterthwaite (1983)).", "doi": "10.7907/rgkfq-awr86", "publisher": "California Institute of Technology", "publication_date": "1995-04" }, { "id": "authors:sb8p2-77f71", "collection": "authors", "collection_id": "sb8p2-77f71", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170818-150309360", "type": "publication_workingpaper", "title": "The Allocation of a Shared Resource Within an Organization", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Noussair", "given_name": "Charles N.", "clpid": "Noussair-C-N" }, { "family_name": "Porter", "given_name": "David P.", "clpid": "Porter-D-P" } ], "abstract": "Many resources such as supercomputers, legal advisors, and university classrooms are shared by many members of an organization. When the supply of shared resources is limited, conflict usually results between contending demanders. If these conflicts can be adequately resolved, then value is created for the organization. In this paper we use the methodology of applied mechanism design to examine alternative processes for the resolution of such conflicts for a particular class of scheduling problems. We construct a laboratory environment, within which we evaluate the outcomes of various allocation mechanisms. In particular, we are able to measure efficiency, the value attained by the resulting allocations as a percentage of the maximum possible value. Our choice of environment and parameters is guided by a specific application, the allocation of time on NASA's Deep Space Network, but the results also provide insights relevant to other scheduling and allocation applications. We find (1) experienced user committees using decision support algorithms produce reasonably efficient allocations in lower conflict situations but perform badly when there is a high level of conflict between demanders, (2) there is a mechanism, called the Adaptive User Selection Mechanism (AUSM) which charges users for time, which yields high efficiencies in high conflict situations but because of the prices paid, the net surplus available to the users is less than that resulting from the inefficient user committee (a reason why users may not appreciate \"market solutions\" to organization problems) and (3) there is a modification of AUSM in which tokens, or internal money, replaces real money, which results in highly efficient allocations without extracting any of the users' surplus. Although the distribution of surplus is still an issue, the significant increase in efficiency provides users with a strong incentive to replace inefficient user committees with the more efficient AUSM.", "doi": "10.7907/sb8p2-77f71", "publisher": "California Institute of Technology", "publication_date": "1995-01" }, { "id": "authors:a64d9-6w039", "collection": "authors", "collection_id": "a64d9-6w039", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160303-155008643", "type": "article", "title": "Introduction [to a special issue of Games and Economic Behavior devoted to what we call experimental game theory]...", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "This special issue of Games and Economic Behavior is devoted to what\nwe call experimental game theory, and the intention is threefold. First,\nwe want to provide a window into one of the exciting new areas in game\ntheoretic research. Second, we try to collect in one place some of the\nbest current work that spans many of the interesting topics current]y being\nstudied. Third, we hope to encourage more game theorists to think about\nthe behavioral and empirical content of their models, particularly in relation\nto data from carefully controlled laboratory experiments. The belief\nis that theory and experiment do not develop independently and the expectation\nis that better interaction will ultimately lead to both better theory\nand better experiment.", "doi": "10.1006/game.1995.1022", "issn": "0899-8256", "publisher": "Elsevier", "publication": "Games and Economic Behavior", "publication_date": "1995", "series_number": "1", "volume": "10", "issue": "1", "pages": "1-5" }, { "id": "authors:hg793-h4150", "collection": "authors", "collection_id": "hg793-h4150", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170830-130149209", "type": "article", "title": "Designing organizations for trading pollution rights", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Szakaly-Moore", "given_name": "Kristin", "clpid": "Szakaly-Moore-K" } ], "abstract": "Regulators and academicians have recently become interested in using a marketable permits program as a new way to control aggregate pollution emissions. Our research focuses on choosing a permit trading mechanism that is both economically efficient and politically viable. We consider an organized trading process and a revenue neutral auction, both of which involve an initial allocation of permits based on past history. Each is tested in a competitive and in a non-competitive environment to determine which mechanism performs best. The results of our research suggest that, overall, the organized trading process outperforms the revenue neutral auction.", "doi": "10.1016/0167-2681(94)90009-4", "issn": "0167-2681", "publisher": "Elsevier", "publication": "Journal of Economic Behavior & Organization", "publication_date": "1994-10", "series_number": "2", "volume": "25", "issue": "2", "pages": "167-196" }, { "id": "authors:pxy7d-tv538", "collection": "authors", "collection_id": "pxy7d-tv538", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160307-113140393", "type": "article", "title": "Voting and Lottery Drafts as Efficient Public Goods Mechanisms", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "This paper characterizes interim efficient mechanisms for public good production and cost allocation in a two-type environment with risk-neutral, quasi-linear preferences and fixed-size projects, where the distribution of the private good, as well as the public goods decision, affects social welfare. An efficient public good decision can always be accomplished by a majority voting scheme, where the number of \"YES\" votes required depends on the welfare weights in a simple way. The results are shown to have a natural geometry and an intuitive interpretation. We also extend these results to allow for restrictions on feasible transfer rules, ranging from the traditional unlimited transfers to the extreme case of no transfers.\n\nFor a range of welfare weights, an optimal scheme is a two-stage procedure which combines a voting stage with a second stage where an even-chance lottery is used to determine who pays. We call this the \"lottery draft mechanism\" Since such a cost-sharing scheme does not require transfers, it follows that in many cases transfers are not necessary to achieve the optimal allocation. For other ranges of welfare weights the second stage is more complicated, but the voting stage remains the same. If transfers are completely infeasible, randomized voting rules may be optimal. The paper also provides a geometric characterization of the effects of voluntary participation constraints.", "doi": "10.2307/2297984", "issn": "0034-6527", "publisher": "Oxford University Press", "publication": "Review of Economic Studies", "publication_date": "1994-04", "series_number": "2", "volume": "61", "issue": "2", "pages": "327-355" }, { "id": "authors:f3s6c-3pw50", "collection": "authors", "collection_id": "f3s6c-3pw50", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170823-160736011", "type": "publication_workingpaper", "title": "Public Goods: A Survey of Experimental Research", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Environments with public goods are a wonderful playground for those interested in delicate experimental problems, serious theoretical challenges, and difficult mechanism design issues. A review is made of various public goods experiments. It is found that the public goods environment is a very sensitive one with much that can affect outcomes but are difficult to control. The many factors interact with each other in unknown ways. Nothing is known for sure. Environments with public goods present a serious challenge even to skilled experimentalists and many opportunities for imaginative work.", "doi": "10.7907/f3s6c-3pw50", "publisher": "California Institute of Technology", "publication_date": "1994-02" }, { "id": "authors:j3tns-nm178", "collection": "authors", "collection_id": "j3tns-nm178", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171128-165813373", "type": "article", "title": "Using computerized exchange systems to solve an allocation problem in project management", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" }, { "family_name": "Rangel", "given_name": "Antonio", "clpid": "Rangel-A" } ], "abstract": "I n this article we study the allocation problem facing the management of a large research and development project. The project management has to allocate resources among competing users to achieve the project goal. Besides the constraint of scarcity, the allocation problem is difficult because users have private parameters that project management requires to know in order to make an optimal allocation. Furthermore, users have incentives to misrepresent the information about these parameters to advance their individual agendas, which can differ from the project goal. A method to solve the allocation problem using computerized exchange institutions is introduced and analyzed. We emphasize that the rules of the exchange should be carefully selected, because different rules produce different results. We use the methodology of experimental economics to demonstrate this conclusion. This research was motivated by JPL's Cassini Mission to Saturn. A computerized exchange described in this article has been implemented by the Cassini Project to assist in the management of the resources used in the design and operation of science instruments.", "doi": "10.1080/10919399409540228", "issn": "1054-1721", "publisher": "Taylor & Francis", "publication": "Journal of Organizational Computing", "publication_date": "1994", "series_number": "3", "volume": "4", "issue": "3", "pages": "271-296" }, { "id": "authors:x8d9n-q6988", "collection": "authors", "collection_id": "x8d9n-q6988", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160328-160830650", "type": "publication_workingpaper", "title": "Voting and Lottery Drafts as Efficient Public Goods Mechanisms", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Palfrey", "given_name": "Thomas R.", "orcid": "0000-0003-0769-8109", "clpid": "Palfrey-T-R" } ], "abstract": "This paper characterizes interim efficient mechanisms for public good production and\ncost allocation in a two-type environment with risk neutral, quasi-linear preferences and\nfixed size projects, where the distribution of the private good, as well as the public\ngoods decision, affects social welfare. An efficient public good decision can always be\naccomplished by a majority voting scheme, where the number of \"YES\" votes required\ndepends on the welfare weights in a simple way. The results are shown to have a natural\ngeometry and an intuitive interpretation. We also extend these results to allow for\nrestrictions on feasible transfer rules, ranging from the traditional unlimited transfers to\nthe extreme case of no transfers.\n\nFor a range of welfare weights, an optimal scheme is a two-stage procedure which\ncombines a voting stage with a second stage where an even-chance lottery is used to\ndetermine who pays. We call this the \"lottery draft mechanism\". Since such a costsharing\nscheme does not require transfers, it follows that in many cases transfers are\nnot necessary to achieve the optimal allocation. For other ranges of welfare weights\nthe second stage is more complicated, but the voting stage remains the same. If transfers\nare completely infeasible, randomized voting rules may be optimal. The paper also\nprovides a geometric characterization of the effects of voluntary participation constraints.", "doi": "10.7907/x8d9n-q6988", "publisher": "California Institute of Technology", "publication_date": "1993-09" }, { "id": "authors:zvw0j-4sc93", "collection": "authors", "collection_id": "zvw0j-4sc93", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170825-143301240", "type": "publication_workingpaper", "title": "Designing Organizations for Trading Pollution Rights", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Szakaly", "given_name": "Kristin E.", "clpid": "Szakaly-K-E" } ], "abstract": "Regulators and academicians have recently become interested in using a marketable permits program as a new way to control aggregate pollution emissions. Our research focuses on choosing a permit trading mechanism that is both economically efficient and politically viable. We consider an organized trading process and a revenue neutral auction, both of which involve an initial allocation of permits based on past history. Each is tested in a competitive and in a non-competitive environment to determine which mechanism performs best. The results of our research suggest that, overall, the organized trading process outperforms the revenue neutral auction.", "doi": "10.7907/zvw0j-4sc93", "publisher": "California Institute of Technology", "publication_date": "1993-07" }, { "id": "authors:s5jdf-g4464", "collection": "authors", "collection_id": "s5jdf-g4464", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20140401-153839671", "type": "monograph", "title": "An Analysis of the Information and Reporting Requirements, Market Architectures, Operational and Regulatory Issues, and Derivative Instruments for RECLAIM", "author": [ { "family_name": "Plott", "given_name": "Charles R.", "orcid": "0000-0001-8363-3628", "clpid": "Plott-C-R" }, { "family_name": "Carlson", "given_name": "Dale", "clpid": "Carlson-D" }, { "family_name": "Olmstead", "given_name": "Nancy", "clpid": "Olmstead-N" }, { "family_name": "Forman", "given_name": "Charles", "clpid": "Forman-C" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David P.", "clpid": "Porter-D-P" }, { "family_name": "Sholtz", "given_name": "Anne", "clpid": "Sholtz-A" } ], "publisher": "South Coast Air Quality Management District", "publication_date": "1993-07" }, { "id": "authors:ejjya-qpw45", "collection": "authors", "collection_id": "ejjya-qpw45", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20140401-152938560", "type": "monograph", "title": "An Analysis and Recommendation for the Terms of the RECLAIM Trading Credit", "author": [ { "family_name": "Carlson", "given_name": "Dale", "clpid": "Carlson-D" }, { "family_name": "Forman", "given_name": "Charles", "clpid": "Forman-C" }, { "family_name": "Olmstead", "given_name": "Nancy", "clpid": "Olmstead-N" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Plott", "given_name": "Charles R.", "orcid": "0000-0001-8363-3628", "clpid": "Plott-C-R" }, { "family_name": "Porter", "given_name": "David P.", "clpid": "Porter-D-P" }, { "family_name": "Sholtz", "given_name": "Anne", "clpid": "Sholtz-A" } ], "abstract": "The South Coast Air Quality Management District (AQMD) has proposed an annual RECLAIM Trading Credit (RTC) with uniform issue and compliance dates as the trading instrument for its market-based regulatory program. The proposed design for this instrument carries potential problems for both RECLAIM facilities and AQMD, including\nmarket imbalances, price volatility, economic inefficiencies, and an increase in ambient emission peaks. These problems result directly from the design of the instrument, and they can be alleviated through the selection of alternate design variables and a change in the allocation of RTCs to RECLAIM facilities. Both the problems and the effectiveness of the solutions have been tested and documented in experiments conducted in the Laboratory for Experimental Economics and Political Science at the California Institute of Technology.", "publisher": "South Coast Air Quality Management District", "publication_date": "1993-04-27" }, { "id": "authors:y75p1-g1790", "collection": "authors", "collection_id": "y75p1-g1790", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170825-145611518", "type": "publication_workingpaper", "title": "The Design of Coordination Mechanisms and Organizational Computing", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "We provide an introduction to a theory of coordination mechanism design and show how to apply it to an assignment problem. The purpose is to introduce those familiar with organizational computing, but unfamiliar with game theory and economics, to the subject. We also describe briefly how we can test new mechanisms before taking them into the field. Finally, we raise some unresolved research questions.", "doi": "10.7907/y75p1-g1790", "publisher": "California Institute of Technology", "publication_date": "1993-02" }, { "id": "authors:xvkqr-sec59", "collection": "authors", "collection_id": "xvkqr-sec59", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170828-145216139", "type": "article", "title": "The design of coordination mechanisms and organizational computing", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "We provide an introduction to a theory of coordination mechanism design and show how to apply it to an assignment problem. The purpose is to introduce those familiar with organizational computing, but unfamiliar with game theory and economics, to the subject. We also describe briefly how we can test new mechanisms before taking them into the field. Finally, we raise some unresolved research questions.", "doi": "10.1080/10919399309540197", "issn": "1054-1721", "publisher": "Taylor & Francis", "publication": "Journal of Organizational Computing", "publication_date": "1993", "series_number": "1", "volume": "3", "issue": "1", "pages": "121-134" }, { "id": "authors:fm315-1t493", "collection": "authors", "collection_id": "fm315-1t493", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171110-151818390", "type": "book_section", "title": "Theories of price formation and exchange in double oral auctions", "book_title": "The Double Auction Market: Institutions, Theories, and Evidence", "author": [ { "family_name": "Easley", "given_name": "David", "clpid": "Easley-D" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "contributor": [ { "family_name": "Friedman", "given_name": "Danile", "clpid": "Friedman-D" }, { "family_name": "Rust", "given_name": "John", "clpid": "Rust-J" } ], "abstract": "We provide a theory to explain the data generated by experiments with double oral auctions. Our theory predicts convergence to the equilibrium implied by the law of demand and supply and provides an explanation of disequilibrium behavior. The predictions of our theory seem to fit the data better than do the predictions of Walrasian, Marshallian, or game theoretic models. Our theory also suggests that, in demand-supply environments, the double oral auction is remarkably robust in the sense that aggregate performance is similar for a very wide range of individual behaviors.", "isbn": "0201624591", "publisher": "Addison-Wesley", "place_of_publication": "Boston", "publication_date": "1993", "pages": "63-97" }, { "id": "authors:dja9h-egh71", "collection": "authors", "collection_id": "dja9h-egh71", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170830-135904085", "type": "publication_workingpaper", "title": "Political Competition in a Model of Economic Growth; Some Theoretical Results", "author": [ { "family_name": "Boylan", "given_name": "Richard T.", "clpid": "Boylan-R-T" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "McKelvey", "given_name": "Richard D.", "clpid": "McKelvey-R-D" } ], "abstract": "We study a one-sector model of economic growth in which decisions about capital accumulation and consumption are made through a political process of two candidate competition. Each voter's utility for a consumption stream is the discounted value of that voter's utility of consumption in each period. We consider the case when voters' one period utility functions for consumption are identical but discount factors are different. We are particularly interested in the conditions under which neoclassical optimal growth paths occur, and conditions in which political business cycles occur.\nThe answer depends on the ability or inability of the candidates to commit to multi-period investment strategies. If candidates can commit indefinitely into the future, then a political (majority rule) equilibrium path will not exist if all discount factors are different. For any feasible consumption path, there is a perturbation which is majority preferred to it. For any neoclassical optimal path there exists a perturbated path that is preferred to it either unanimously or by all but one voter. These results are true even if the perturbations can differ at no more than three consecutive periods from the original path.\nIf candidates are unable to commit to multi-period plans, we show there is a unique subgame perfect, stationary, symmetric equilibrium to the infinite horizon two candidate competition game; namely the optimal consumption path for the median voter. The equilibrium is unique in the following sense: It is the unique limit of subgame perfect equilibria to the finite horizon electoral game.\nIn the case when candidates can commit for a finite time into the future, we show that a stationary minmax path (a path which minimizes the maximum vote that can be obtained against it) yields a political business cycle.", "doi": "10.7907/dja9h-egh71", "publisher": "California Institute of Technology", "publication_date": "1992-10" }, { "id": "authors:akh8x-d1e58", "collection": "authors", "collection_id": "akh8x-d1e58", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170918-122035887", "type": "book_section", "title": "Market Failure", "book_title": "The World of Economics", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "contributor": [ { "family_name": "Eatwell", "given_name": "John", "clpid": "Eatwell-J" }, { "family_name": "Milgate", "given_name": "Murray", "clpid": "Milgate-M" }, { "family_name": "Newman", "given_name": "Peter", "clpid": "Newman-P" } ], "abstract": "The best way to understand market failure is first to understand market success, the ability of a collection of idealized competitive markets to achieve an equilibrium allocation of resources which is Pareto optimal. This characteristic of markets, which was loosely conjectured by Adam Smith, has received its clearest expression in the theorems of modern welfare economics. For our purposes, the first of these, named the First Fundamental Theorem of welfare economics, is of most interest. Simply stated it reads: (1) if there are enough markets, (2) if all consumers and producers behave competitively, and (3) if an equilibrium exists, then the allocation of resources in that equilibrium will be Pareto optimal (see Arrow, 1951, or Debreu, 1959). Market failure is said to occur when the conclusion of this theorem is false; that is, when the allocations achieved with markets are not efficient.", "doi": "10.1007/978-1-349-21315-3_53", "isbn": "978-0-333-55177-6", "publisher": "Palgrave Macmillan", "place_of_publication": "London", "publication_date": "1991", "pages": "407-412" }, { "id": "authors:g74e1-vvg20", "collection": "authors", "collection_id": "g74e1-vvg20", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160525-065131499", "type": "article", "title": "Allocating Uncertain and Unresponsive Resources: An Experimental Approach", "author": [ { "family_name": "Banks", "given_name": "Jeffrey S.", "clpid": "Banks-J-S" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David P.", "clpid": "Porter-D-P" } ], "abstract": "We identify an important class of economic problems that arise naturally in several applications: the allocation of multiple resources when there are uncertainties in demand or supply, unresponsive supplies (no inventories and fixed capacities), and significant demand indivisibilities (rigidities). Examples of such problems include: scheduling job shops, airports, or supercomputers; zero-inventory planning; and the allocation and pricing of NASA's planned Space Station. Using experimental methods, we show that the two most common organizations used to deal with this problem, markets and administrative procedures, can perform at very low efficiencies (60-65% efficiency in a seemingly robust example). Thus, there is a need to design new mechanisms that more efficiently allocate resources in these environments. We develop and analyze two mechanisms that arise naturally from auctions used to allocate single-dimensional goods. These new mechanisms involve computer-assisted coordination made possible by the existence of networked computers. Both mechanisms significantly improve on the performance of administrative and market procedures.", "issn": "0741-6261", "publisher": "Blackwell Publishing", "publication": "RAND Journal of Economics", "publication_date": "1989", "series_number": "1", "volume": "20", "issue": "1", "pages": "1-25" }, { "id": "authors:z3mme-9r294", "collection": "authors", "collection_id": "z3mme-9r294", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170912-151329290", "type": "book_section", "title": "Incentive Compatibility", "book_title": "Allocation, Information and Markets", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "contributor": [ { "family_name": "Eatwell", "given_name": "John", "clpid": "Eatwell-J" }, { "family_name": "Milgate", "given_name": "Murray", "clpid": "Milgate-M" }, { "family_name": "Newman", "given_name": "Peter", "clpid": "Newman-P" } ], "abstract": "Allocation mechanisms, organizations, voting procedures, regulatory bodies and many other institutions are designed to accomplish certain ends such as the Pareto-efficient allocation of resources or the equitable resolution of disputes. In many situations it is relatively easy to conceive of feasible processes; processes which will accomplish the goals if all participants follow the rules and are capable of handling the informational requirements. Examples of such mechanisms include marginal cost pricing, designed to attain efficiency, and equal division, designed to attain equity. Of course once a feasible mechanism is found, the important question then becomes whether such a mechanism is also informationally feasible and compatible with 'natural' incentives of the participants. Incentive compatibility is the concept introduced by Hurwicz (1972, p. 320) to characterize those mechanisms for which participants in the process would not find it advantageous to violate the rules of the process.", "doi": "10.1007/978-1-349-20215-7_15", "isbn": "978-0-333-49539-1", "publisher": "Palgrave Macmillan", "place_of_publication": "London", "publication_date": "1989", "pages": "141-151" }, { "id": "authors:96gx6-bw273", "collection": "authors", "collection_id": "96gx6-bw273", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170905-153759955", "type": "publication_workingpaper", "title": "Information Aggregation in Two-Candidate Elections", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Many interesting political institutions, such as campaigning, polls, and sequences of elections cannot be understood in the context of standard spatial competition models of elections with fully informed candidates and voters. To fill this void, we introduce a model of elections in which candidates are privately and asymmetrically informed about the electorate. This model differs from other incomplete information models, such as the rational expectations model, in that a full range of sequential strategic behavior is considered. We begin with a model in which candidates can constantly revise their positions before the election. In this case, one might expect each to \"invert\" the other's strategies and infer the other's private information, as is done in equilibrium with rational expectations. However, we find that each candidate, knowing the other will try to make such inferences, will follow a strategy which is not invertible. No information will leak from one candidate to the other. The outcome will be identical to a single-move election with incomplete information and no information aggregation will occur.\nThe introduction of a public poll changes the results in an interesting way. Candidates still use pooling strategies (strategies that are constant on their private information) to avoid leaking anything to the opponent but, contrary to the case without the poll, candidates learn about the electorate before the election. In equilibrium, candidates use mixed strategies (pure strategy equilibria do not exist) and the better informed player cannot prevent the lesser informed from learning from the poll. No private information is leaked but information aggregation occurs. We conclude with an examination of the effect on information aggregation of a sequence of elections. In the previous results, candidates moves were \"free\" in the sense that revisions were costless as in a \"cheap talk\" model. Now moves are not free and hiding information today in order to improve one's chances of winning tomorrow may lower one's chances today. We show that information aggregation may occur both through the results of the election (as with the poll) and through the leakage of private information. We also provide an example in which the strategic choices of the candidates are skewed away from the rational expectations equilibrium. Because of the asymmetric information and the strategic issues surrounding information leakage, behavior is different than would be observed in simple one-shot elections.", "doi": "10.7907/96gx6-bw273", "publisher": "California Institute of Technology", "publication_date": "1988-11" }, { "id": "authors:mhs8g-89z20", "collection": "authors", "collection_id": "mhs8g-89z20", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170906-135234942", "type": "publication_workingpaper", "title": "Allocating Uncertain and Unresponsive Resources", "author": [ { "family_name": "Banks", "given_name": "Jeffrey S.", "clpid": "Banks-J-S" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David", "clpid": "Porter-D-P" } ], "abstract": "We identify an important class of economic problems that arise naturally in several applications: the allocation of multiple resources when there are uncertainties in demand or supply, unresponsive supplies (no inventories and fixed capacities), and significant demand indivisibilities (rigidities). Examples of such problems include scheduling job shops, airports or super-computers, zero-inventory planning, and the allocation and pricing of NASA's planned Space Station. We show that the two most common organizations used to deal with this problem, markets and administrative procedures, can perform at very low efficiencies (60-65percent efficiency in a seemingly robust example). Thus, there is a need to design new mechanisms that more efficiently allocate resources in these environments. We develop and analyze two that arise naturally from auctions used in the allocation of single dimensional goods. These new mechanisms involve computer assisted coordination made possible by the existence of networked computers. Both mechanisms significantly improve on the performance of both administrative and market procedures.", "doi": "10.7907/mhs8g-89z20", "publisher": "California Institute of Technology", "publication_date": "1988-09" }, { "id": "authors:68k2y-nze20", "collection": "authors", "collection_id": "68k2y-nze20", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170908-151906378", "type": "monograph", "title": "The Design of Mechanisms to Allocate Space Station Resources", "author": [ { "family_name": "Banks", "given_name": "Jeffrey S.", "clpid": "Banks-J-S" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" }, { "family_name": "Porter", "given_name": "David P.", "clpid": "Porter-D-P" } ], "abstract": "This paper demonstrates the use of applied organizational design to investigate possible\nmechanisms to allocate the resources of Space Station. First, a specific laboratory experimental\nenvironment (testbed) and baseline policy are developed using the salient technical features of the\nSpace Station and past Space Shuttle experiences. The use of priority contracts to assist in\ncontingent rescheduling of resources due to supply curtailments is established. Next, generalized\nversions of an English auction and Vickrey-Groves type sealed bid auction are designed and\ndeveloped to allocate scheduled resource use and priority. Finally, these mechanisms are tested and\nevaluated in the testbed. The data demonstrates that the expected efficiency increases significantly\nusing the auction mechanisms rather than allocations from first-come-first-served processes.\nHowever, the auction mechanisms do not produce outcomes near the 100% level of efficiency.\nSeveral results are dedicated to the revenue generating properties of the mechanisms and individual\nbidding behavior.", "doi": "10.7907/68k2y-nze20", "publisher": "California Institute of Technology", "publication_date": "1987-06" }, { "id": "authors:k0pn8-m1r25", "collection": "authors", "collection_id": "k0pn8-m1r25", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170906-145751798", "type": "publication_workingpaper", "title": "Incentive Compatibility", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Incentive compatibility is described and discussed. A summary of the current state of understanding is provided. Key words are: incentive compatibility, game theory, implementation, mechanism, Bayes, Nash, and revelation.", "doi": "10.7907/k0pn8-m1r25", "publisher": "California Institute of Technology", "publication_date": "1987-01" }, { "id": "authors:rjxey-cy967", "collection": "authors", "collection_id": "rjxey-cy967", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170912-134741993", "type": "publication_workingpaper", "title": "Market Failure", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Market failure is described and discussed. A summary of the current state of understanding is provided. Key words are: market failure, public good, externalities, rational expectations, information, monopoly, and competitive equilibrium.", "doi": "10.7907/rjxey-cy967", "publisher": "California Institute of Technology", "publication_date": "1987-01" }, { "id": "authors:an8qg-fv712", "collection": "authors", "collection_id": "an8qg-fv712", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171110-142543364", "type": "book_section", "title": "The economics of the space station", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "contributor": [ { "family_name": "Macauley", "given_name": "M. K.", "clpid": "Macauley-M-K" } ], "abstract": "Space exploration and development are naturally conducted on the cutting edge of science and technology. Such efforts inevitably involve decisions made in the presence of extensive uncertainty. For some projects, particularly those which involve the creation and maintenance of an infrastructure, the emphasis is switching from specific engineering goals (for example, a man on the moon by 1969) to more diffuse, continuing, multiple-dimensional goals. This is especially true of the space station, which is envisioned as both a vital link in the exploration of the planets and a major facility for the advancement of commercial efforts in space. The combination of uncertainty and diffuse, long-term goals fundamentally alters the viability and validity of traditional economic and engineering approaches to the management of large public research and development projects.\nIt has become popular to call into question the recent management of continuing projects like the space shuttle or major new weapons systems. We must, however, recognize that cost overruns, gold plating and other forms of apparent mismanagement are usually not the result of individual venality and misbehavior but only the natural outcomes of the existing organizational rules of the game. Just as the performance of an engineering design is guided by the laws of physics, the performance of an organizational design is guided by the laws of behavior. This fact means that to improve performance we cannot simply add more or better manpower; rather, we must look for new organizational solutions. There are many ad hoc opinions about how to do this; what I propose is a more systematic, scientific approach.\nThis paper examines some of the economic and management issues which must be addressed if the space station is to effectively and efficiently pursue the myriad goals that have been chosen for it. I characterize and evaluate in a somewhat stylized fashion three possible policies: an \"engineering\" approach, an \"economics\" approach, and a systematic custom design approach. I will use the space station as an example to highlight some of the major economic issues facing large-scale multipurpose research and development efforts, the analytical capabilities we now have to address these issues, and the (non-engineering) research that needs to be done to advance the successful long-term development of space.", "publisher": "National Academy of Engineering", "publication_date": "1987" }, { "id": "authors:65nfx-ytv91", "collection": "authors", "collection_id": "65nfx-ytv91", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170912-150213282", "type": "monograph", "title": "The Economics of Space Station", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In this paper I will examine some of the economic and management issues which must be addressed if Space Station is to effectively and efficiently pursue the myriad goals that have been chosen for it. I will characterize and evaluate in a somewhat stylized fashion three possible policies: an \"engineering\" approach, an \"economics\" approach, and a systematic custom design approach. I will use Space Station as an example to highlight some of the major economic issues facing large scale multipurpose research and development efforts, the analytical capabilities we now have to address these issues, and the (non-engineering) research that needs to be done to advance the successful long-term development of space.", "doi": "10.7907/65nfx-ytv91", "publisher": "California Institute of Technology", "publication_date": "1986-10" }, { "id": "authors:5m9sr-vg645", "collection": "authors", "collection_id": "5m9sr-vg645", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171114-133240240", "type": "article", "title": "The scope of the hypothesis of Bayesian equilibrium", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "What behavior can be explained as the Bayes equilibrium of some game? The main finding is-almost anything. Given any Bayesian (coordination) game with positive priors, and given any vector of nondominated strategies. there is an increasing transformation of each utility function such that the given vector of strategies is a Bayes (Nash) equilibrium of the transformed game. Any nondominated behavior can be rationalized as Bayes equilibrium behavior. Some comments on the implications of these results for game theory are included.", "doi": "10.1016/0022-0531(86)90020-7", "issn": "0022-0531", "publisher": "Elsevier", "publication": "Journal of Economic Theory", "publication_date": "1986-06", "series_number": "1", "volume": "39", "issue": "1", "pages": "59-82" }, { "id": "authors:hwega-5cv60", "collection": "authors", "collection_id": "hwega-5cv60", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170913-133503410", "type": "monograph", "title": "Theories of Price Formation and Exchange in Double Oral Auctions", "author": [ { "family_name": "Easley", "given_name": "David", "clpid": "Easley-D" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "We provide a theory to explain the data generated by Double Oral Auctions. The primary conclusion suggested by Double Oral Auction experiments is that the quantities exchanged and the prices at which transactions take place converge to, or near to, the values predicted by the competitive equilibrium model. Our theory predicts convergence to the competitive equilibrium and provides an explanation of disequilibrium behavior. The predictions of our theory fit the data better than do the predictions of Walrasian, Marshallian or game theoretic models.", "doi": "10.7907/hwega-5cv60", "publisher": "California Institute of Technology", "publication_date": "1986-04" }, { "id": "authors:nz1n2-wkn56", "collection": "authors", "collection_id": "nz1n2-wkn56", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20170919-145551174", "type": "publication_workingpaper", "title": "The Scope of the Hypothesis of Bayesian Equilibrium", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "What behavior can be explained as the Bayes equilibrium of some game? The main finding is almost anything. Given any Bayesian (coordination) game with positive priors and given any vector of nondominated strategies, there is an increasing transformation of each utility function such that the given vector of strategies is a Bayes (Nash) equilibrium of the transformed game. Any nondominated behavior can be rationalized as Bayes equilibrium behavior. Some comments on the implications of these results for game theory are included.", "doi": "10.7907/nz1n2-wkn56", "publisher": "California Institute of Technology", "publication_date": "1985-12" }, { "id": "authors:60y7s-cvp08", "collection": "authors", "collection_id": "60y7s-cvp08", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171120-165125711", "type": "book_section", "title": "The paradox of voting and candidate competition: A general equilibrium analysis", "book_title": "Essays in Contemporary Fields of Economics in Honor of Emmanuel T. Weiler (1914-1979)", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "contributor": [ { "family_name": "Horwich", "given_name": "George", "clpid": "Horwich-G" }, { "family_name": "Quirk", "given_name": "James P.", "clpid": "Quirk-J-P" } ], "abstract": "[No abstract]", "isbn": "9780911198591", "publisher": "Purdue University Press", "place_of_publication": "West Lafayette, Indiana", "publication_date": "1981", "pages": "54-80" }, { "id": "authors:0t36a-dte23", "collection": "authors", "collection_id": "0t36a-dte23", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171121-142550221", "type": "article", "title": "The existence of efficient and incentive compatible equilibria with public goods", "author": [ { "family_name": "Groves", "given_name": "Theodore", "clpid": "Groves-T" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In our previous paper, \"Optimal Allocation of Public Goods...,\" (1977) we presented a mechanism for determining efficient public goods allocations when preferences are unknown and consumers are free to misrepresent their demands for public goods. We proved the basic welfare theorem for this model: If consumers are competitive in markets for private goods and follow Nash behavior in their choice of demands to report to the mechanism, then equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibrium will exist for a wide class of economies. Our conditions are slightly stronger than those required to prove the existence of a Lindahl equilibrium. In order to rule out the possibility of bankruptcy, we assume additionally that at all Pareto optimal allocations, private goods consumption is bounded away from zero.", "doi": "10.2307/1912820", "issn": "1468-0262", "publisher": "Econometric Society", "publication": "Econometrica", "publication_date": "1980-09", "series_number": "6", "volume": "48", "issue": "6", "pages": "1487-1506" }, { "id": "authors:ck8tg-pc937", "collection": "authors", "collection_id": "ck8tg-pc937", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171019-155736804", "type": "publication_workingpaper", "title": "The Paradox of Voting and Candidate Competition: A General Equilibrium Analysis", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "Conventional analysis of the decision of expected utility maximizing agents to vote has concluded that it is irrational to vote unless voters have a distorted view of their individual impact or place a direct value on the act of voting. On the other hand, mathematical analyses of the electoral process (see, e.g., Davis, Hinich, Ordeshook (1970)), have usually assumed that all voters vote. Each theory is incorrect in the sense that in actual elections turnout is neither zero nor 100%. In this paper we will argue that previous analyses of expected utility maximizing voters s topped too soon because of the partial equilibrium approach and that if each voter considers the simultaneous reactions of all voters in a \"rational\" manner, then depending on the location of the candidates' platforms, turnout will usually be positive but less than 100%. In particular we will derive a (probabilistic) vote supply function, given a distribution of voters and the choice of platforms of candidates, which has the property that, even with costs of voting, unless the candidates have identical platforms, the expected turnout is positive. The model and these results are presented in sections 1a and 1b.", "doi": "10.7907/ck8tg-pc937", "publisher": "California Institute of Technology", "publication_date": "1978-07" }, { "id": "authors:8q2dx-kpv75", "collection": "authors", "collection_id": "8q2dx-kpv75", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171020-165624169", "type": "publication_workingpaper", "title": "The Existence of Efficient and Incentive Compatible Equilibria with Public Goods", "author": [ { "family_name": "Groves", "given_name": "Theodore", "clpid": "Groves-T" }, { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "In our previous paper, \"Optimal Allocation of Public Goods...,\" (1977) we presented a mechanism for determining efficient public goods allocations when preferences are unknown and consumers are free to misrepresent their demands for public goods. We proved the basic welfare theorem for this model: If consumers are competitive in markets for private goods and follow Nash behavior in their choice of demands to report to the mechanism, then equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibrium will exist for a wide class of economies. Our conditions are slightly stronger than those required to prove the existence of a Lindahl equilibrium. In order to rule out the possibility of bankruptcy, we assume additionally that at all Pareto optimal allocations, private goods consumption is bounded away from zero.", "doi": "10.7907/8q2dx-kpv75", "publisher": "California Institute of Technology", "publication_date": "1978-03" }, { "id": "authors:7tw4m-gc231", "collection": "authors", "collection_id": "7tw4m-gc231", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171121-144342176", "type": "article", "title": "Incentive compatibility and incomplete information", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "It is by now reasonably well known that when informationally decentralized processes are used to make collective choice decisions or to allocate resources, individuals may find it in their interest to distort the information they provide and that these distortions may lead to non-optimal group decisions. In the social choice context, this has been formalized in the Gibbard-Satterthwaite Theorem, which states that all non-dictatorial rules will have this property. In a different context, Hurwicz has shown that there is a private goods neo-classical exchange economy such that any decentralized mechanism which selects Pareto-optimal allocations and which has a no-trade option will have this property. Roberts has provided a similar example in the public goods context. Other work (e.g., Green-Laffont, Groves-Loeb, Hurwicz, and Walker) indicates that, for mechanisms designed to select efficient outcomes, in most environments some agent will have an incentive to misrepresent his information and thus to manipulate the mechanism. All these results lead one to the conjecture that it is almost impossible to design any mechanism for group decisions which is compatible with individual incentives and efficiency.", "doi": "10.1016/0022-0531(78)90047-9", "issn": "0022-0531", "publisher": "Elsevier", "publication": "Journal of Economic Theory", "publication_date": "1978", "volume": "18", "pages": "171-189" }, { "id": "authors:qk8yn-ng985", "collection": "authors", "collection_id": "qk8yn-ng985", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171023-122234187", "type": "publication_workingpaper", "title": "Incentive Compatibility and Incomplete Information", "author": [ { "family_name": "Ledyard", "given_name": "John O.", "clpid": "Ledyard-J-O" } ], "abstract": "It is by now reasonably well known that when informationally decentralized processes are used to make collective choice decisions or to allocate resources, individuals may find it in their interest to distort the information they provide and that these distortions may lead to non-optimal group decisions. In the social choice context, this has been formalized in the Gibbard-Satterthwaite Theorem, which states that all non-dictatorial rules will have this property. In a different context, Hurwicz has shown that there is a private goods neo-classical exchange economy such that any decentralized mechanism which selects Pareto-optimal allocations and which has a no-trade option will have this property. Roberts has provided a similar example in the public goods context. Other work (e.g., Green-Laffont, Groves-Loeb, Hurwicz, and Walker) indicates that, for mechanisms designed to select efficient outcomes, in most environments some agent will have an incentive to misrepresent his information and thus to manipulate the mechanism. All these results lead one to the conjecture that it is almost impossible to design any mechanism for group decisions which is compatible with individual incentives and efficiency.", "doi": "10.7907/qk8yn-ng985", "publisher": "California Institute of Technology", "publication_date": "1977" } ]