Curriculum Vitae David P. Porter
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FERC Scarf-Nov-11-2003-Latest
Efficient Market-Clearing Prices in Markets with Nonconvexities Richard P. O’Neill a Paul M. Sotkiewicz b Benjamin F. Hobbs c Michael H. Rothkopf d William R. Stewart, Jr. e December, 2000; Revised November, 2003 Abstract This paper addresses the existence of market clearing prices and the economic interpretation of strong duality for integer programs in the economic analysis of markets with nonconvexities (indivisibilities). Electric power markets in which nonconvexities arise from the operating characteristics of generators motivate our analysis; however, the results presented here are general and can be applied to other markets in which nonconvexities are important. We show that the optimal solution to a linear program that solves the mixed integer program has dual variables that: (1) have the traditional economic interpretation as prices; (2) explicitly price integral activities; and (3) clear the market in the presence of nonconvexities. We then show how this methodology can be used to interpret the solutions to nonconvex problems such as the problem discussed by Scarf (1994). Economics, Equilibrium Pricing; MIP models of markets, MIP Applications a Chief Economic Advisor, Federal Energy Regulatory Commission. b Public Utility Research Center, University of Florida. c Department of Geography and Environmental Engineering, The Johns Hopkins University. d Department of Management Science and Information Systems and RUTCOR, Rutgers University. e School of Business, College of William and Mary. 1 I. Introduction Scarf (1990, 1994) describes most markets in today's advanced economies as having considerable indivisibilities (nonconvexities). For example, firms must make discrete decisions on whether to invest in a new project or when to start-up a production process. -
The Market As a Learning Algorithm: Consequences for Regulation and Antitrust
THE MARKET AS A LEARNING ALGORITHM: CONSEQUENCES FOR REGULATION AND ANTITRUST Ramsi A. Woodcock* ABSTRACT The heart of the Chicago School’s attack on the antitrust laws was a skepticism about the ability of government to improve upon unregulated market outcomes. Although the attack failed to eliminate regulation or antitrust entirely, it has proven so enduringly devastating as an intellectual matter that virtually no proposal for government regulation or increased antitrust enforcement is put forward today without an attempt either to justify the proposed departure from an assumed-legitimate free market baseline or to dismiss Chicago School skepticism as an intellectual plot bankrolled by business elites. Chicago School skepticism has been so devastating because it draws sustenance from an inapt metaphor for the economy: that of evolution through natural selection. The free market is, for the Chicago School, nature itself, and all the glories of life suggest that evolution does just fine when left to its own devices, creating a powerful basis for skepticism regarding the need for government intervention in the economy. Except that evolution never did do anything to promote economic growth, so much as theft, a fact that human beings know well given their status as predators of unparalleled success. Humanity did not escape from the subsistence economics that characterizes all of evolved life until humanity started to exert control over the forces of evolution, which is to say: to regulate. A better metaphor for the economy than natural selection is that of a computer running a machine learning algorithm engineered to channel evolutionary forces away from theft and toward growth. -
Is the Market a Test of Truth and Beauty Essays in Political
Is the Market a Test of Truth and Beauty? Is the Market a Test of TRUTH BEAUTY? Essays in Political Economy by L B. Y Ludwig von Mises Institute © 2011 by the Ludwig von Mises Institute and published under the Creative Commons Attribution License 3.0. http://creativecommons.org/licenses/by/3.0/ Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 mises.org ISBN: 978-1-61016-188-6 Contents Introduction . vii : Should Austrians Scorn General Equilibrium eory? . Why Subjectivism? ..................... Henry George and Austrian Economics ........... e Debate about the Efficiency of a Socialist Economy . e Debate over Calculation and Knowledge ......... Austrian Economics, Neoclassicism, and the Market Test . Is the Market a Test of Truth and Beauty? . Macroeconomics and Coordination . e Keynesian Heritage in Economics . Hutt and Keynes ....................... e Image of the Gold Standard . Land, Money, and Capital Formation . Tacit Preachments are the Worst Kind . Tautologies in Economics and the Natural Sciences . : Free Will and Ethics . Elementos del Economia Politic . Is ere a Bias Toward Overregulation? . Economics and Principles .................. American Democracy Diagnosed . Civic Religion Reasserted . A Libertarian Case for Monarchy . v vi Contents Uchronia, or Alternative History . Hayek on the Psychology of Socialism and Freedom . Kirzner on the Morality of Capitalist Profit . Mises and His Critics on Ethics, Rights, and Law . e Moral Element in Mises’s Human Action . Can a Liberal Be an Egalitarian? ............... Rights, Contract, and Utility in Policy Espousal . Index ............................... Introduction Tis book’s title is the same as the newly chosen title of chapter , “Is the Market a Test of Truth and Beauty?” Tat chapter, along with the one before it, questions a dangerously false argument for the free-market economy sometimes made by its supposed friends. -
Research Paper
The Importance of Being Intelligent: Understanding Market Institutions Shyam Sunder Yale University ABSTRACT Those using artificial intelligence (AI) in finance and other fields seek to meet or beat human intelligence by a chosen index of performance appropriate to each context. Efforts are focused on finding ways of increasing the intelligence of artificial agents through analysis, machine learning or other methods to achieve this goal. This paper reports on an effort in which the goal of gaining understanding of the properties of social institutions — markets in particular — is sought by populating them with minimally- intelligent agents (called zero-intelligence agents), and examining institutional performance. Computer simulations with Zero Intelligence (ZI) agents reveal robust outcomes in certain markets and sensitivity of others, to trader intelligence. Data analyses from simulations help to address some important questions about why certain markets, even when they are populated by cognitively-bounded human traders, yield outcomes predicted by models predicated on utility maximization, while other markets exhibit systematic deviations from such predictions. A certain kind of intelligence — extraction of social surplus—appears to be embedded in the rules and structure of markets and social institutions. Keywords: Intelligence of markets, zero-intelligence traders, computer simulations, predicting market behavior Revised May 11, 2021 I am grateful for participant comments on an earlier version of this paper prepared as one of three Annual Distinguished Lectures at the Centre for Computational Finance and Economic Agents (CCEFA), University of Essex, U.K. I thank my research collaborators Dan K. Gode, Karim Jamal, Antoni Bosch, and Shabnam Mousavi for helpful comments and suggestions and Elizabeth Viloudaki for editing. -
Putting Auction Theory to Work
P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB610-FM CB610-Milgrom-v3 October 27, 2003 16:27 PUTTING AUCTION THEORY TO WORK This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of “optimal auctions” and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation. It shows how seemingly different auction designs can lead to nearly identical outcomes if the participating bidders are the same – a finding that focuses attention on (1) attracting bidders and (2) mini- mizing the cost of running the auction and bidding in it. It shows how new auc- tion designs can accommodate complicated procurement settings and sales with many interrelated goods. Paul Milgrom is Leonard and Shirley Ely Professor of Humanities and Social Sciences and Professor of Economics at Stanford University.He has also taught at Harvard University and MIT. -
A Primer on Auction Design, Management, and Strategy∗
A Primer on Auction Design, Management, and Strategy∗ David J. Salant TSE 31000 Toulouse December 23, 2013 DRAFT 2 Contents 1 Introduction 11 1.1 Goals of this Primer . 11 1.2 What are Auctions? . 14 1.2.1 Why Auctions? . 16 1.2.2 Types of Auctions . 17 1.3 A New Age of Auctions . 19 1.3.1 New Types of Auctions . 20 1.3.2 Auctions Replacing Regulation . 22 1.3.3 Auctions in the Private Sector . 24 1.4 Why Auction Design (and Management) Matters . 25 1.5 Outline of This Primer . 27 2 Game Theory, Auction Design, and Strategy 29 2.1 Game Theory and Auctions . 29 2.2 Noncooperative Games . 30 2.2.1 One-Shot Auctions . 30 3 4 CONTENTS 2.2.2 Normal Form Games . 31 2.2.3 Equilibrium in Normal Form Games . 32 2.2.4 Mixed Equilibrium in Spectrum Auctions: Some Ex- amples . 33 2.2.5 Equilibrium in Multi-attribute Auctions . 34 2.3 Multi-stage and Sequential Auctions . 36 2.3.1 Subgame Perfect Equilibrium . 36 2.3.2 Signaling Games . 38 2.4 Repeated Games . 39 2.4.1 Finitely Repeated Games . 40 2.4.2 Infinitely Repeated Games . 41 2.4.3 Overlapping Generations of Players . 42 2.5 Summary . 42 3 Revenue Equivalence 45 3.1 The Four Basic Auction Types for Single-Object Auctions . 45 3.2 Auction Strategy in the Four Basic Auction Types . 47 3.3 Strategic Equivalence . 48 3.4 Revenue Equivalence of English and Dutch Auctions . 51 3.5 Summary . -
The Primal Auction: a New Design for Multi-Commodity Double Auctions
The Primal Auction: a new design for multi-commodity double auctions Michiel Keyzer and Lia van Wesenbeeck1 Abstract It this paper, we propose an auction design for a multi-commodity double auction where participants simultaneously submit their valuations (bids) for the commodities. We label this the Primal Auction (PA) mechanism. The auctioneer computes the prevailing market price as the average over the bids and allocates the goods over the bidders in accordance with the relative bid of each bidder compared to this market price. Under the assumption of money metric utility functions, we show convergence of this process to an efficient equilibrium, but only if truth telling by all participants can be enforced. Commitment of all players to pay the prevailing market price at each round of the auction for the commodities allocated to them provides a strong incentive for truthful revelation, since lying means that the bidder has to pay the market price for a non-optimal quantity. However, to address concerns on shill bidding and bid shielding, we implement a stronger test on truth telling by endowing the auctioneer with the power to inactivate bids that are inconsistent with Revealed Preference. If bids cannot be refuted under his rule, then this implies that the existence of a concave utility function cannot be ruled out, and this is a sufficient condition for convergence of the projected gradient path represented by the auction design. There is no need to actually estimate this utility function: it is sufficient that bids are rationalizable. The PA mechanism can be extended to include a learning phase after which automata can finish the auction, which makes it also a suitable design for Internet auctions such as eBay. -
(Neoclassical) Metaphors for “The Economy”
[Work in Progress. Please Do Not Quote.] Auction or selection? Two competing (neoclassical) metaphors for “the economy” Yahya M. Madra* Introduction Competitive markets and the private ownership of economic resources can harness the independent, decentralized, and self-interested activities of economic agents and deliver a general, economy-wide, equilibrium that maximizes the social welfare. This is a generic, modern neoclassical version of the famous “invisible hand” theorem. Nevertheless, there is no single version of this theorem: Bernard Mandeville’s Fable of the Bees mobilizes a different metaphor than the notion of natural order described in Physiocrats’ Tableau Economique. Similarly, Adam Smith’s organicist understanding of the “system of natural liberty” differs from the system of interdependency described in the general equilibrium model of Léon Walras. Metaphors economic thinkers and economists use in conceptualizing the economy and its functioning differ, and this difference has material implications for economic and social policy. Even when economic thinkers and economists describe similar sounding ideas, they may be describing them in radically opposed ways, drawing radically opposed conclusions, and formulating radically opposed policy prescriptions. Based on this premise, this paper aims to highlight a line of fracture that traverses the entire history of neoclassical tradition from its inception onwards and splits the tradition around two different representations of the “invisible hand” theorem—notwithstanding the internal differences on both sides of the fracture. While a Walrasian skein, one that began in Lausanne and continued in postwar North America in and around the Cowles Commission, tended to construct general equilibrium models ground up from the * Visiting Associate Professor of Economics, Drew University, NJ, USA. -
Kevin A. Mccabe EDUCATION EMPLOYMENT SERVICE
Kevin A. McCabe Professor of Economics, Law, and Neuroscience Director, Center for the Study of Neuroeconomics George Mason University Email: [email protected] Office: 703-993-9441 Mobile: 703-946-0070 Web: www.kevinmccabe.net www.neuroeconomics.net Address: 4400 University Drive, MSN 1B2 Fairfax, Va. 20030 EDUCATION 1972-76 Villanova University, B.S., Economics-- 1976 National Honor Societies: Phi Kappa Phi and Pi Mu Epsilon. 1976-82 University of Pennsylvania, Ph.D., Economics – 1985 1986-87 Post-Doctoral Fellow, Center for Political Economy, Washington University EMPLOYMENT 1982-85 Assistant Professor of Economics, University of Arizona 1988-90 Research Scientist, Economic Science Laboratory, University of Arizona 1990-96 Associate Professor of Accounting, University of Minnesota 1996-98 Associate Professor of Economics, U of A 1998-01 Professor of Economics, U of A 2001-05 Professor of Economics and Law, George Mason University 2005- Professor of Economics, Law, and Neuroscience, George Mason University SERVICE 2011- Editorial Board Member, Journal of Bioeconomics 2011- Director, IFREE Summer High School Workshop at the CSN 2011-12 Founding Chapter President, Phi Kappa Phi, George Mason University 2009- Editor, Neuroeconomics e-Journal, Social Science Research Network 2008 Member, National Science Foundation Committee of Visitors Member, National Science Foundation Creative-IT Panel 2007-11 Board Member, Neuroeconomics Society Network Member, MacArthur Foundation Network on Neuroscience and Law 1 2006-07 Program Advisory Committee, FIAS -
VITA Daniel Houser July, 2020
VITA Daniel Houser July, 2020 Interdisciplinary Center for Economic Science Contact Information George Mason University, MSN 1B2 Office (Economics): (703) 993 - 1150 Fairfax, VA. 22015 Office (ICES): (703) 993 - 4856 E-mail: [email protected] Citizenship: U.S.A. http://mason.gmu.edu/~dhouser Education Degree Field Institution Year Ph.D. Economics University of Minnesota 1998 B.A. Mathematics University of Wisconsin at Madison 1989 B.A. Mathematical Economics University of Wisconsin at Madison 1989 Employment 2014 - present Director, TFAS Programs at George Mason University 2009 - present Chairman, Department of Economics, George Mason University 2008 - present Director, Interdisciplinary Center for Economic Science, George Mason University 2006 - present Professor of Economics, George Mason University 2003 - 2004 Special Volunteer, National Institute of Neurological Disorder and Stroke, National Institutes of Health 2002 - 2006 Associate Professor of Economics (with tenure), George Mason University 2002 Associate Professor of Economics (with tenure), University of Arizona 1998 - 2002 Assistant Professor of Economics, University of Arizona Editorial Service 2017-present Editor-in-Chief, Journal of Economic Behavior and Organization 2015-present Editorial board, Experimental Economics 2015-present Editorial board, Journal of the Economic Science Association 2014-present Editor, Journal of Behavioral and Experimental Economics 2013-present Academic Editor, PLoS ONE 2009-present Editor, Neuroeconomics NEP working paper archive 2001-present -
Computing a Walrasian Equilibrium in Iterative Auctions with Multiple Differentiated Items⋆
Computing a Walrasian Equilibrium in Iterative Auctions with Multiple Differentiated Items? Kazuo Murota1, Akiyoshi Shioura2, and Zaifu Yang3 1 University of Tokyo, Tokyo 113-8656, Japan, [email protected] 2 Tohoku University, Sendai 980-8579, Japan, [email protected] 3 University of York, York YO10 5DD, UK, [email protected] Abstract. We address the problem of computing a Walrasian equilib- rium price in an ascending auction with gross substitutes valuations. In particular, an auction market is considered where there are multiple dif- ferentiated items and each item may have multiple units. Although the ascending auction is known to find an equilibrium price vector in finite time, little is known about its time complexity. The main aim of this pa- per is to analyze the time complexity of the ascending auction globally and locally, by utilizing the theory of discrete convex analysis. An exact bound on the number of iterations is given in terms of the `1 distance between the initial price vector and an equilibrium, and an efficient algo- rithm to update a price vector is designed based on a min-max theorem for submodular function minimization. 1 Introduction We study an ascending auction, where given a set of discrete (or indivisible) items, the auctioneer aims to find an efficient allocation of items to bidders as well as market clearing prices of the items (see [5, 6] for surveys). In recent years, there has been a growing use of iterative auctions for items such as spectrum licenses in telecommunication, electrical power, landing slots at airports, etc. -
The Socioeconomic Approach of Electronic Fish Markets
IIFET 2004 Japan Proceedings THE IMPACT OF ECLECTRONIC AUCTION SYSTEMS ON FISH PRICES Patrice Guillotreau, LEN, University of Nantes, France Ramón Jiménez-Toribio, MEMPES, University of Huelva, Spain ABSTRACT Game and experimental theorists have specified the conditions under which different auction systems may lead to distinct price levels. By changing the sales organisation, the introduction of electronic auction systems on first-hand fish markets is expected to have modified bidders’ habits, hence affecting the price levels. A demand model based on weekly series between January 1999 and December 2003 is estimated for Nephrops norvegicus in two French ports where different electronic systems have been introduced, in order to identify a structural break concurrent with the date of implementation. Because unit root tests led to reject the non-stationarity of series, a recent standard model searching for multiple breaks has been estimated. Evidence for a single breakpoint within the sample is found and discussed in socioeconomic terms. Key-words: electronic auction, fish prices, structural change INTRODUCTION The implementation of electronic markets for fishery products responds partly to the economic objectives of reducing transaction costs and eliminating market power by bringing transparency to markets, particularly on the demand side. Live markets are meant to be largely imperfect and tend to decrease in influence because of the number of intermediaries, the congestion of sellers coming into the market, the possible collusive behaviours through the personal relationships among buyers and/or sellers preventing the largest expression of private interests. The new technology of information systems is likely to build up “perfect” markets. However electronic markets can also be considered as institutions translating the influence of stake- holders.