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Posts Tagged ‘Auctions’

How to Auction Off an Unwanted Duty

A high-school economics teacher named Steve Fortna writes from Colorado with a clever solution:

The Spirit Week (formerly known as Homecoming) Dance is upon us.  This Friday I will be pressed into service to monitor the dress and dance of around 150 kids while a DJ, who does not care about the moral development of young adults in their formative years, plays whatever music they want to hear.  Loudly.  I really do not want to be there.  I am not alone in that sentiment.  

My school has tried various methods of determining which teachers should be on chaperone duty at each dance over the years without much success.  Either we all go (way too many people but at least we’re all in the same boat), or only a select few (more efficient use of faculty, but it’s not fair).  While most teachers don’t particularly enjoy monitoring dances, there are different levels of unease.  What’s an equitable way to determine who’s on duty?


The Candy Auction

As I do each year, I auctioned off candy (this year Reese’s peanut butter cups) to my class.  None were bought at a price above $0.50, all 23 were sold at that price. As usual, a nice illustration of downward-sloping demand curves.  I had kept one piece at the start, extolling its taste while eating half of it (and thus presumably causing an increase in demand).  The other half fell off my lectern, and I stepped in it after returning to the front of the room.  The first half piece of candy was really tasty, and I was dying for another one.  

What to do?


Peter Cramton: Medicare Auction Gadfly

My friend and co-author Peter Cramton continues his two-year crusade to improve the workings of “Medicare’s Bizarre Auction Program.”  You can watch his YouTube testimony before the United States House Committee on Small Business here.

(See also his Oral Testimony, Transcript of Hearing, Video of Entire Hearing.)

Peter’s supplemental comments are particularly devastating in rebutting two claims of Lawrence Wilson, Centers for Medicare and Medicaid Services (CMS) Director of the Chronic Care Group:

CMS [claim]: “CMS worked closely with stakeholders to design and implement the program.”

Mr. Wilson. “CMS worked closely with stakeholders to design and implement the program in a way that is fair for suppliers and sensitive to the needs of beneficiaries.”


Auction Theory and LIBOR

An article in The Economist argues that a little auction theory might solve some of the British Bankers’ Association (BBA) current LIBOR problems:

Some of LIBOR’s failures also have echoes in auctions. Traders at involved banks are accused of aligning their LIBOR estimates in an attempt to affect the final rate. They were able to cross-check what others had done, since the BBA makes individual estimates public. These traders had, in effect, formed a “bidding ring,” analogous to a sort of cartel that is familiar to observers of auctions.

Fortunately, a variety of economists have researched how to break bidding rings.  Their findings suggests that, in addition to relying on actual data (instead of estimates) and creating penalties for false bidding, the LIBOR system would benefit from a few changes focused on the weaknesses of bidding rings:

Once banks’ LIBOR bids actually have some commitment value, the system should focus on the weaknesses that auction cartels are known to have. The cartel-enforcement problem would be more acute if the BBA increased the number of submitting banks and kept those bids private. The entry of outsiders should be actively encouraged, by allowing other lenders to banks (money-market funds, say) to submit estimates, too.


Today Only: Buy Your Own Town

A small town in Wyoming is going up for auction today. Buford, Wyoming, has just one resident — Don Sammons — and he’s putting the town up for sale. From the official auction description:

The Buford, Wyoming, auction represents a unique opportunity to acquire an entire town, along with the Buford Trading post, an income-producing convenience and fuel store. Included in the auction are 10+/- acres of land, five buildings, United States Post Office P.O Box, liquor license, inventory, furnishing, tools, plow and 3 vehicles. There is also a Union Wireless cellular tower with lease, and parking area previously used by an overnight shipping company for night time trailer switches. 

The online auction starts at 2 p.m., E.S.T. The opening bid has been set at $100,000, with a required deposit of  $50,000.

(HT: Katherine Wells)


The World's Most Expensive Photograph

A photograph of a river, some grass, and sky was auctioned at Christie’s in New York last week for a record-setting $4,338,500 to an unknown buyer. “Rhein II,” created in 1999 by German artist Andreas Gursky, beat out Cindy Sherman‘s previous photo auction record of $3.89 million in May, 2011.

We can’t repost an image of it, copyright and what not; though you can see it in the link above. But “Rhein II” measures 6 feet by 11 feet. The picture is one in a series of six photographs – the other five live in museums around the world, including the Museum of Modern Art and the Tate Modern.


Probabalistic Auctions: Why Don't Universities Raffle off Chair Endowments?

A recent post of mine was addressed to the super-rich who are considering endowing a chair in order to garner public recognition. But what about the merely rich who wish to have their names recognized in perpetuity with an eponymous endowed chair at their university? Is there anything they can do?
Yes. There are two things.
First, a much larger swath of people can follow the Benjamin Franklin strategy and endow a delayed chair. Franklin famously bequeathed about $4,000 in 1790 to the Commonwealth of Pennsylvania. Franklin:

instructed that [his bequest] be invested for two hundred years and at the end of that period, the money should be used to do good. Franklin died in 1790. In 1990, his gift had grown to over $2 million.


What to Make of the Unabomber Auction? And What Should I Do With My Own Unabomber Artifacts?

It seems so coincidental that I wonder if indeed it’s a coincidence: the FBI requests a DNA sample from Ted Kaczynski, a.k.a. Unabomber, just as the government’s court-ordered auction of Kaczynski’s possessions gets underway (it closes on June 2). The FBI is still trying to solve the 1982 Tylenol poisonings, and Kaczynski is presumably a person of interest.
If nothing else, the news has brought a lot more attention to the auction. It can use it. As of this writing, most of the 58 items could be had for a few hundred dollars. Exceptions are Kaczynski’s Smith-Corona typewriter ($8,025) and his hand-written Manifesto ($16,025).


Communism and the Market

The Economist reports that the city of Shanghai has been auctioning car license plates. The average auction price has recently been $6,900, truly remarkable considering average family income in China, and even in Shanghai. The number of plates given out in 2011 will be reduced further in an attempt to reduce gridlock and pollution (both of which my experience several years ago in Shanghai suggests are world-class).


Market Failure in Auctions?

As did its recent acquisition, Northwest Airlines, Delta is doing on-line auctions of seats that must be vacated if the plane is overbooked.


The Right Price for Parking

The City of Austin sells valet parking companies the right to use a parking space for $250 per year. Is that the right price? I doubt it.


Fix Medicare's Bizarre Auction Program

Harry Truman once quipped, “Give me a one-handed economist! All my economists say, ‘On the one hand, on the other'” Often even a lone economist has difficulty making a recommendation. While true on certain matters, there are many issues where economists do agree about the right and wrong course of action. A case in point is competitive bidding for Medicare supplies.