Three Essays in Microeconomics
Date Issued
2016
Date
2016
Author(s)
Ho, Szu-Hsien
Abstract
This dissertation consists of three essays in microeconomics. This fist essay is entitled ""The Seller''s Listing Strategy in Online Auctions"", which proposes a unified framework to characterize the seller''s optimal listing strategy as a function of the theirs rates of time impatience. Specifically, the fixed-price listing, the regular auction, and the buy-it-now auction are each a solution of the seller''s single optimization problem under different values of the relative rate of time impatience: The perfectly patient seller adopts the regular auction when facing perfectly patient bidders; for the other cases, the sellers with medium range of time-impatience adopt the buy-it-now auctions; and the most impatient sellers adopt the fixed-price listing. Moreover, if the seller is more impatient than the bidders, the reverse price is inversely related to the value of the seller''s discount factor, either within or across formats. This in turn implies that the posted price in the fixed-price sale is greater than the reserve price of the buy-it-now auction, followed by that of the regular auction. These predictions offer clear empirical implications, which accommodate our data. The second essay is entitled ""Subjective Performance Evaluation with Correlated Information"". This essay revisits the property of the optimal contract of a static principal-agent model with subjective performance evaluations. Assume that the principal and the agent receive correlated binary-signals. It is shown that, the optimal contract falls into three types. In the first type, which parallels MacLeod''s (2003) result, the agent''s compensation depends on the principal''s signal only, while the latter''s wage cost depends on the signals of both parties. The second type is symmetric to that of the first: the agent''s compensation depends on the signals of both parties, while the principal''s wage cost depends only on the agent''s signal. In the first two types, although one party''s pay (or cost) depends only on the other party''s signal, his own signal is nonetheless used as an instrument to prevent the other party from strategically misreporting. The third type fully utilizes both parties'' information, that is, both parties'' payoffs depend on both parties'' signals. Moreover, we can show that, as the implemented effort level increases, the first type of the contract tends to prevail. The third essay is a comment on the famous study ""Optimal Contracting with Subjective Evaluation"" (MacLeod 2003). This essay concentrates on the topic of money burning under the more general information structure. MacLeod argues that money burning always holds if the implemented effort level exceeds the minimum. In this essay, I point out his argument is invalid. I give one counter-example against this result. Moreover, I give a sufficient condition, which generically holds, such that the existence of money burning is established.
Subjects
fixed-price listing
regular auction
buy-it-now auction
principal-agent model
contract
subjective performance evaluation
money burning
Type
thesis
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