Research

In markets with budget-constrained buyers, competitive equilibria need not be efficient in the utilitarian sense, or maximise the seller’s revenue. We consider a setting with multiple divisible goods. Firstly, we show that competitive equilibrium outcomes, and only those, are constrained utilitarian efficient, a notion of utilitarian efficiency that respects buyers’ demands and budgets. Secondly, we establish that, when buyers have linear valuations, competitive equilibrium prices are unique and revenue-optimal for a zero-cost seller.

Large-scale testing is crucial in pandemic containment, but resources are often prohibitively constrained. We study the optimal application of pooled testing for populations that are heterogeneous with respect to an individual’s infection probability and utility that materializes if included in a negative test. We show that the welfare gain from overlapping over non-overlapping testing is bounded. Moreover, nonoverlapping allocations, which are conceptually and logistically simpler to implement, are empirically nearoptimal, and we design a heuristic mechanism for finding these near-optimal allocations. In numerical experiments, we highlight the efficacy and viability of our heuristic in practice. We implement and provide evidence on the benefits of utility-weighted pooled testing in a real-world setting. Our pilot study at a higher education research institute in Mexico finds no evidence that performance and mental health outcomes of participants in our regime are worse than under the counterfactual of full access for individuals without testing.

We initiate the study of how auction design affects the division of surplus among buyers. We propose a parsimonious measure for equity and apply it to the family of standard auctions for homogeneous goods. Our surplus-equitable mechanism is efficient, Bayesian-Nash incentive compatible, and achieves surplus parity among winners ex-post. The uniform-price auction is equity-optimal if and only if buyers have a pure common value. Against intuition, the pay-as-bid auction is not always preferred in terms of equity if buyers have pure private values. In auctions with price mixing between pay-as-bid and uniform prices, we provide prior-free bounds on the equity-preferred pricing rule under a common regularity condition on signals.

We consider a package assignment problem with multiple units of indivisible items. The seller specifies preferences over partitions (between buyers) of their supply as packaging costs. To express these preferences, we propose incremental costs together with a graph that defines cost interdependence. This facilitates using linear programming to find anonymous and package-linear Walrasian equilibrium prices. We provide necessary and sufficient conditions for the existence of Walrasian equilibria, as well as additional sufficient conditions. Furthermore, our cost framework ensures fair and transparent dual pricing and admits preferences over the concentration of allocated bundles in the market.

We study strategic bidding behavior in three first-price auctions for substitute goods: a Product-Mix auction, a sequential auction, and a simultaneous auction. Theory predicts that in the unique risk-neutral Bayes-Nash equilibrium, the Product Mix and the sequential format perform nearly identically with respect to bidder surplus, revenue, and welfare, and the simultaneous auction only slightly worse. We test these predictions in a virtual lab experiment, considering an asymmetric market with a flexible bidder and competitive fringes, and a symmetric market with three flexible bidders. The empirical results do not completely align with the theory: the Product-Mix auction outperforms both other formats in bidder surplus and welfare, while the simultaneous auction generates the highest revenue. With symmetric bidders, payoffs in the PMA are 90% (156%) higher than in the sequential (simultaneous) auction, and efficiency is 12% higher.

We study equilibria in Product-Mix, sequential, and simultaneous auctions, which are used to sell

differentiated, indivisible goods. A flexible bidder with unit demand, interested in buying any of the goods, competes against several inflexible bidders, each interested in only one specific good. For first-price and second-price payments, we obtain theoretical results on equilibrium bidding, and compare efficiency, revenue, and bidder surplus numerically. Differences in outcomes between Product-Mix and sequential auctions are small for a range of value distributions. The simultaneous auction performs worst in all dimensions, and differences in performance vary substantially with the degree of competition the flexible bidder faces.