Bidding

About: Bidding is a research topic. Over the lifetime, 15371 publications have been published within this topic receiving 294233 citations. The topic is also known as: competitive bidding.

Market-Based Coordination of Thermostatically Controlled Loads—Part I: A Mechanism Design Formulation

Abstract: This paper focuses on the coordination of a population of thermostatically controlled loads (TCLs) with unknown parameters to achieve group objectives. The problem involves designing the device bidding and market clearing strategies to motivate self-interested users to realize efficient energy allocation subject to a peak energy constraint. This coordination problem is formulated as a mechanism design problem, and we propose a mechanism to implement the social choice function in dominant strategy equilibrium. The proposed mechanism consists of a novel bidding and clearing strategy that incorporates the internal dynamics of TCLs in the market mechanism design, and we show it can realize the team optimal solution. This paper is divided into two parts. Part I presents a mathematical formulation of the problem and develops a coordination framework using the mechanism design approach. Part II presents a learning scheme to account for the unknown load model parameters, and evaluates the proposed framework through realistic simulations.

Repeated auctions of incentive contracts, investment and bidding parity with an application to takeovers

Abstract: This article considers a two-period model of natural monopoly and second-sourcing. The incumbent supplier invests in the first period. After observing the incumbent's first-period performance, the buyer may break out in the second period. The investment may or may not be transferable to the second source, and it may be monetary or take the form of human capital. We determine whether the incumbent should be favored at the reprocurement stage, and how the slope of his incentive scheme should evolve over time. We find that the gains from second-sourcing are not so large as one might hope. Finally, we reinterpret the second source as a raider and the breakout as a takeover. We discuss the desirability of defensive tactics and obtain a rich set of testable implications concerning the size of managerial stock options, the extent of defensive tactics, the firm's performance, and the probability of a takeover.

Competitive Bidding in Auctions with Private and Common Values

Abstract: The objects for sale in most auctions possess both private and common value elements. This salient feature has not yet been incorporated into a strategic analysis of equilibrium bidding behaviour. This paper reports such an analysis for a stylised model in which bidders receive a private value signal and an independent common value signal. We show that more uncertainty about the common value has a negative effect on efficiency. Information provided by the seller decreases uncertainty, which raises efficiency and seller s revenues. Efficiency and revenues are also higher when more bidders enter the auction.

Funding liquidity risk: Definition and measurement

Abstract: Funding liquidity risk has played a key role in all historical banking crises. Nevertheless, a measure for funding liquidity risk based on publicly available data remains so far elusive. We address this gap by showing that aggressive bidding at central bank auctions reveals funding liquidity risk. We can extract an insurance premium from banks’ bids which we propose as a measure of funding liquidity risk. Using a unique data set consisting of all bids in all auctions for the main refinancing operation conducted at the ECB between June 2005 and October 2008 we find that funding liquidity risk is typically stable and low, with occasional spikes especially around key events during the recent crisis. We also document downward spirals between funding liquidity risk and market liquidity. As measurement without clear definitions is impossible, we initially provide definitions of funding liquidity and funding liquidity risk.