Post on 14-Jan-2016
transcript
Ecosel as an Example of Subscription Games
Lecture 12 (5/20/2015)
Bundle 3
Bundle 28
The ECOSEL Concept
Bundle 31
Bundle 43
Bundle 1
Bundle 31
Bundle 3
Bundle 3 Old-Forest: 534.79 ac Carbon: 25,087 MgC Reserve Price: $80
Bundle 31 Old-Forest: 698.52 ac Carbon: 76,743 MgC Reserve Price: $291
The ECOSEL Concept (cont.)
Bundle 31
Bundle 1 (Max Timber Profit)
reserve price
Bundle 18
The Auction Component
Classification
ECOSEL is a multi-unit, multi-dimension,
public good subscription gamewith incomplete informationand asymmetric preferences
Subscription games: Bagnoli and Lippman 1989
Mathematical Characterization
Notation:
• I = the set of bundles available in the auction (i indexes I);
• K = the set of players who play the game (k indexes K);
• = valuation or utility that Player k assigns to Bundle k;
• = the final bid that Player k places on Bundle i; and
• ri is the reserve price of Bundle i
kiv
kib
Mathematical Characterization Cont.
k k k ki i i i i i i
k K k K k K
SS v b b r v r
Social Surplus:
Note: Social surplus does not depend on the value of final bids
Mathematical Characterization Cont.
Theoretical Welfare Maximum:
k ki i j j
j Ik K k K
v r Max v r
Mathematical Characterization Cont.
Winning Conditions and Efficiency:
(1) 0
(2)
ki i
k K
k ki i j j
j Ik K k K
b r
b r Max b r
Mathematical Characterization Cont.
Payoff Function for Player :
\ \
,
, :
,
k k
k
k k k k k k ki i i i i i i i j j
j Ii I k Kk K k k K k
ki k
u v b
v b p b b r b b r Max b rMax
b B
kib R i I
k
Mechanism Design
• Design options– Maximize social surplus– Maximize seller revenue
• Methods– Theoretical testing (game theory and
simulation)– Empirical testing (experimental economics)
• Software development
Mechanism Design cont.
• Design variables:– Reserve price disclosure– Communication policy– Bid withdrawal policy– Refund policy– Number of bundles– Auction sequencing– And many more….
Website
How it works
How it works
How it works