This paper shows that the quality scores in keyword auctions can be strategically chosen to extract all the advertisers’ surplus. The reason for the full extraction result is that the quality scores may effectively set all the bidders’ valuations equal to the highest valuation, which induces intense bidding competition. JEL classifications: D44; M37

Alastair McFarlane U.S. Department of Housing and Urban Development Office of Policy Development and Research Washington, D.C. 20410 Tel. 202 708 0426 Fax 202 708 1159 Email: [email protected] Original: May 1999 First revision: August 2001 JEL Classifications: R11 (Analysis of growth, development, and changes;) R33 (Housing supply and markets); and R38 (government policies; regulatory ...

The Internet presents today’s researchers with unprecedented opportunities to conduct field experiments. Using examples from Economics and Computer Science, we present an analysis of the design choices, with particular attention to the underlying technologies, in conducting online field experiments and report on lessons learned. JEL Classifications: C93, H41

We propose an allocation rule that takes into account the importance of players and their links. Since a network describes the interaction structure between agents, our allocation rule covers both bilateral and multilateral interactions. We provide a characterization of this rule in terms of well known axioms and compare it to other allocation rules in the literature. JEL classifications: A14; ...

Vega-Redondo (1997) showed that imitation leads to the Walrasian outcome in Cournot Oligopoly. We generalize his result to aggregative quasi-submodular games. Examples are the Cournot Oligopoly, Bertrand games with differentiated complementary products, CommonPool Resource games, Rent-Seeking games and generalized Nash-Demand games. JEL-Classifications: C72, D21, D43, L13.

This essay assesses the relationship between farm size and productivity. Both parametric and nonparametric methods are used to derive efficiency measures. Smaller farms are found to have higher net farm income per hectare, and to be more technically efficient, than larger farms. JEL Classifications: Q12, O12

We estimate the political economy determinants of budget deficit forecast errors. Since the adoption of the Stability Pact, Eurozone governments have manipulated forecasts before elections. The political orientation and the institutional design of governments also affects the quality of forecasts. JEL classifications: H62, H87, C23, C53, E62

We study the speed of social learning, when two players learn from private signals as well as the actions of the other. Our main finding is that increased interaction between the agents can lower the rate of learning: learning is significantly slower when both players observe each other, than when one only observes the other. JEL classifications: C73, D82, D83

The Great Recession seems to be creating a New Interventionist Economics characterized by bubbles, radical uncertainty, animal spirits, complexity dynamics, and extra-market control. When placed in that order, these characteristic create the acronym BRACE. I review some evidence and literature pointing to BRACE economics and briefly suggest some avenues to challenge the new interventionists. JE...

We compare the behavior of car mechanics and college students as sellers in experimental credence goods markets. Finding largely similar behavior, we note much more overtreatment by car mechanics, probably due to decision heuristics they learned in their professional training. JEL classifications: C91, D82, C72