Critique of Klemperers Auction Design Essay Example for Free

Critique of Klemperers Auction Design Essay What Really Matters in Auction Design, Paul Klemperer, Journal of Economic Perspective Volume 16, Number 1 Winter 2002, pp. 169-189 I really like this article because I agree with most of what it says. Auctions, in recent times, have become very popular and I dont need to interview anyone about this, I just need to examine myself to find out. Over the past few years, to be brutally honest, I have been absolutely addicted to eBay. com, an online shopping site made famous by the way in operates. Not only are all transactions made online, which is very convenient, but the way things are sold is what makes the shopping experience at eBay so unique, and fun. As the article mentions, auctions (like eBay) can be potentially good for both buyers and sellers. An auction can involve many buyers, for instance the auction of a house, whereas in the olden days, a negotiation over a house was usually between two people (bilateral negotiation) today there can be many sellers all competing for the same prize. This is good for the seller because now there is much more competition for the prize, therefore the seller will think hes getting the highest price for the same item. I think this is true because as human psychology goes, humans (generally speaking), tend to handle things better if they come in small increments, using the purchase of a house as an example, one would be somewhat overwhelmed at seeing a price tag of $1,000,000 for a house. However, instead of selling a house straight off a price-tag, if the auction method was taken, bidding might start at say $200,000, which sounds incredibly cheap. After that, the auction could rise in very small increments, say $3,000, which wouldnt be very over-whelming for the human mind to take in. And with this method, it is much easier to convince the human mind to believe that the house is worth $1,000,000, or more! However, as the article mentions, one should not be over-excited at the prospect of auctioning everything. Like most things, auctions can have their pit-falls. A major pitfall is bidder collusion. This is where buyers, or bidders, group together to cooperate with one another. This is a serious problem because this is regarded as anti-competitive behaviour which is a serious crime against the law. Sometimes, the ending winning price will be lower than what the seller had paid for it in the first place, making it an unprofitable auction. This could happen when for example, there are 10 Nike shoes for sale, and 10 bidders interested in Nike shoes. Collusion takes place when the 10 sly bidders come together and cooperate with each other so that each will go home with a pair of shoes at the lowest possible price, often the starting price of the auction, which often is very low. This is detrimental to the profits the seller was hoping to make because essentially, there is not enough competition, and it is very hard to prove in court that the bidders were colluding. I think this rarely on eBay, it hasnt happened to my knowledge, this could be because eBay has the power to monitor conversations between online members and any anti-competitive behaviour is detected and the members guilty will get into trouble, possibly kicked out and disallowed from using eBay again. A possible solution to this, as the article mentions is the tactic of hiding certain bits of information from the bidders. The use of the sealed-bid auction can be used so that bidders dont know what the current price/bid is and therefore they wont know what price they can and should collude at, because anyone can secretly enter a bid slightly higher than the collusion agreed price and walk away for more goods than everybody else. This is bad for that one person who deviated from the collusion and won everything if the other members find out it was him. However, another way to protect this competitive buyer is to make the winner anonymous. So now this seems like the perfect auction design, sealed bid auction, anonymous winner, but this design still has its pitfalls. Imagine you were the winner of the Nike shoes by sealed bid auction and you are anonymous, you paid $200 for them. However, later you find out that the runner-up bidder (the person with the second highest bid) only bided $50. It turns out that you bid and paid $150 more than you had to, this would be very humiliating and embarrassing for you. This can be a major problem I would imagine, however eBay has sort of managed to sort a similar problem out, you put the maximum your are willing to bid, if you win, you only have to pay $1 more than the runner up, that way you are the one willing to pay the most, yet you pay the least possible given the other competitors, this way, everyone stays happy. I think this is a really smart way to do it because not only can you almost assure yourself of winning, given youve got lots of money, but it means that youll pay as little as possible for the goods. The only other problem possible with this method is that the runner-up may become jealous of you and may bid up the price, these are called phoney bids, just so that youll have to pay more money, however, this is not often a problem because it is very risky for the runner-up to do this because he may over-take you in the bidding and end up having to pay the high-price. Which I would say serves him right for being so jealous and childish. If the runner-up wants the good so bad and is so jealous, let him have it but make him pay a high price. This brings me to the next thing which this article clearly points out, beware the Winners Curse. It is extremely easy to over-bid in any auctions because of the fact that bidders tend to think in terms of small increments and not big numbers (as pointed out above), therefore it is very easy for bidders to bid too much, win the good, and end up paying more than the goods actual value. In some instances, bidders are paying more for Nike shoes at auctions, when they could buy the same pair of shoes at a retail shop like say, Rebel Sports. This is called the winners curse, this can be avoided by getting as much information about the product/good as possible before bidding on the shoes. This I know has happened to me on numerous occasions on eBay. com. au, mainly because I wanted the product and I also felt proud about the fact that I beat everybody else at the auction, little did I know how much my confidence would plummet when I found out that I paid too much for the same pair of shoes! But, as Klemperer points out, hiding information about the product is not always at the sellers best interest. This point should be quite self-explanatory because, why would bidders bid aggressively if they dont know much about the item they are bidding on? This was also a lesson learnt the hard way for me, these days if Im bidding on something, I want to read that the item Im bidding is real/authentic and not a fake and that way if the item they give me is a fake, I can get a refund. If the seller wishes to encourage aggressive bidding, he/she has to provide useful and honest information for the bidders otherwise aggressive bidding is nothing but a dream. Another problem that can be faced by auctioneers is as Klemperer labels it Entry Deterrence and Predation, this is not a problem on eBay because all bidders bid at their own pace. However, in the case of an auction for say a house where bidders stand in a crowd with one another, really aggressive bidders tend to scare everyone away. On eBay where you can make small incremental bids as low as 20i at a time at anytime (provided the auction has not ended), with house auctions really aggressive bidders can bid huge increments which tends to scare off everybody else and so that person dominates the auction and has an advantage. This predatory action can be avoided by allowing the auction price to only rise by little increments at one time, this is sometimes seen where the auctioneers job is to offer the crowd a winning price from which the bidders only need to raise their hand to signal that they accept the price offered, this in turn removes a lot of the predatory actions of a few. There are many other interesting points made by Klemperer, he really is a scientist when it comes to auction analysis and I really admire the work he has done. So for you future bidders, watch out the winners curse and find out plenty of information about the thing you are bidding on, and dont get over-excited, this is very dangerous. Other than that, I look forward to reading more of Klemperers articles.

Harry Potter :: essays research papers

During this day and time there are many cool fads that catch on quite quickly and leave quickly as well. Lately there has been one fad that has caught on and it doesn’t seem as if it is going to leave anytime soon. This fad has caused much chaos and controversy throughout America. This fad is called Harry Potter. It seems as if everyone has his or her own opinion on it. Harry Potter started out being a book by J. K. Rowling, intended to entertain children. But somehow it has gotten dragged through the mud and made into a bigger deal than it was until the name Harry Potter is commonly heard on everyday news. The media and many adults are claiming that these books and movie are evil. Robert McGee, associate pastor of the First Baptist church of Merritt Island of CA Says â€Å"I’ve read the Potter books and they are wonderfully written but were not talking about the Smurfs here. Children are leaning the elements of witchcraft in the context of being told it’s the greatest thing since sliced bread.† Many of the spells that are used in the movie and books are real spells from the religion Wicca from Great Britain. Roger Coleman, a Wiccan minister of the Church of Iron Oak in Palm Bay, said he found very similarity between his religion and the witchcraft in the series. This is believed to bring children to want to try witchcraft. A video was by The First Baptist church of Merritt Island has started a Potter movie of their own. The one-hour video has been shown to hundreds of people in 11 churches across Brevard County CA. The truth, according to the video, is that â€Å"children as young as kindergarten are being introduced to human sacrifice, and the sucking of blood from dead animals.† On the other hand though many people believe that the books are harmless and are meant to make children use their imagination. Kristin Kendall, an 11-year-old from Port St. John said, â€Å"most kids can tell the difference between fantasy and reality. I’ve read all four books, they are all pretty good. I like the mythical creatures like the unicorn.† Judith Krug ALA spokeswoman said the Potter books are Challenged for two main reasons. â€Å"The complaints are based on the feeling that evil pervades the works and the belief that if young people read these books they’ll forget everything their parents taught them and immediately become witches and warlocks.

Impressing Your Boss

It sounds like a no-brainer, but quiz your boss on what is the most important way you can spend your time and then make those tasks a priority, suggests Steve Langerud, director of professional opportunities at DePauw University. By tackling the objectives that your boss holds in high esteem, you'll naturally be in a better spot to get attention and praise for your work. 2. Demonstrate your value Forget what your job description says, create an action plan for how you can be doing your job better, says Mary Hladio, founder of Ember Carriers Leadership Group. Consult your boss and other leaders within the organisation for their input, and put the ideas in motion. 3. Be a team player Shaunti Feldhahn, author of ‘The Male Factor', says high-level managers of both sexes want to know that their employees are on board with the team, especially at critical moments. â€Å"In a demanding period, you want to make sure you are sharing the same pain,† she says. For example, this might mean staying late for a meeting or pitching in on a company-wide initiative. (For more, see Seven tips for staying off the chopping block. ) Even if it's not part of your job requirements or you haven't been asked to do it, voluntarily offer your boss reports on your progress, says former human resources trainer, Mimi Donaldson. â€Å"Bosses are busy,† she says. â€Å"You cannot expect them to notice when you do something great. † But a routine email summing up your day-to-day accomplishments and where you stand on major projects is an influential way to keep your boss informed without monopolising time. 5. Network like you're unemployed Langerud also advises reaching out to colleagues in other departments and requesting their feedback on how you can help them be more effective. Around the company, it will only improve your reputation, he says, and it will likely get circulated back to your boss that you are a problem-solver and a dedicated worker. (Learn more in Four career networking tips that work. ) 6. Be heard and seen It's not about gossiping around the water cooler every morning, but finding subtle, yet powerful, routes to contribute to your firm. For instance, it may be presenting a strong, thoughtful point in a meeting, or sharing innovative ideas up the ranks about ways to improve your company's operation. Plus, being seen at company events, such as holiday parties and other social gatherings, volunteer activities and corporate retreats, shows you care about your job. The bottom line Not only is the job market more competitive in recessionary times, it's also increasingly difficult to get a raise. That's because the pool of money corporations reserve for rewarding staff – even the most stellar of employees – is shrinking. The current work environment demands that you must stand out in your boss's mind if you want to get a bump in your salary or a promotion.

Find out What a Bulbous Bow Is

The strongest resistance any vessel faces in standard operations comes from displacement as the hull moves through the water. Waves that climb the bow are water being pushed aside faster than it can move away. It takes a lot of power to overcome the viscosity and mass of water and that means burning fuel, which adds to costs. A bulbous bow is an extension of the hull just below the waterline. It has many subtle shape variations but it’s basically a rounded front portion that flares out slightly as it blends into the traditional displacement hull construction. These forward protrusions are about twice as long as the width of the base and they would usually not extend forward past the top of the bow. The basic principle is to create a low-pressure zone to eliminate the bow wave and reduce drag. First appearing on the USS Delaware in 1910, the bulbous bow was a controversial design of U.S. Navy Ship Architect David W. Taylor. Much of the controversy disappeared ten years later when passenger ships began exploiting the design to increase speeds. Hulls built with bulbous bow sections are common today. Under certain conditions, this type of design is very efficient at redirecting forces of hydrodynamic resistance and drag. There is a movement against bulbous bows that allows greater flexibility of ships at a time when slow steaming is a way to save fuel. Good Conditions for Bulbous Bows The design of a ship with a bulbous bow is discussed in many textbooks and technical articles. It is often referred to as a theory or an art, which is a short way of saying nobody is 100 percent sure of what they are writing. There are details to be worked out but modern builders have proprietary ways of analyzing and integrating all hydrodynamic aspects of their hulls and these methods are strict secrets. A bulbous bow works best under certain conditions and good design gives efficiency gains throughout the range of these factors. Speed – At low speeds, a bulbous bow will trap water above the bulb without forming a low-pressure zone to cancel the bow wave. This leads to increased drag and loss of efficiency. Each design has what is known as most efficient hull speed, or often just hull speed. This term refers to the speed where the shape of the hull is acting on the water is such a way to produce the minimum possible drag. This ideal hull speed might not be the top speed of a ship because at some point the lower pressure zone created by the bow features becomes larger than necessary. A zone of lower pressure water that is larger than the hull is inefficient and leads to reduced rudder response. Ideally, the cone of lower pressure water will collapse just before the props. This gives the prop blades something to push against and limits cavitation at the props and rudder. Cavitation will lead to reduced efficiency of props, sluggish steering, and excessive wear of hull and drive components. Size – Vessels under 49 feet (15 m) do not have enough wetted area to take advantage of a bulbous bow. The amount of drag on a hull is related to its wetted area. The structure of the bulb also increases drag and at a certain point, the benefits shrink to zero. Conversely, larger ships with a high proportion of waterline to frontal area use the bulbous bow most effectively. Bad Conditions for Bulbous Bows Rough Seas – While a traditional hull rises with the wave, a hull with a bulbous bow can dig in even if it is designed to lift the bow under normal conditions. The issue of trim is one of the most deeply dividing aspects of bow design among naval architects. There is also a huge psychological aspect among crews who perceive this bow design as dangerous in storms. There is some truth that these bows dig into wave faces but there is little proof that it is more dangerous than traditional designs. Ice – Some ice breaking ships do have a special shape of a bulbous bow that is heavily reinforced. Most bulbous bows are prone to damage since they are the first point of contact with an obstacle. In addition to ice, large debris and fixed objects like dock faces can damage these extended underwater bows.