ECONOMICS
Information Asymmetry and Bidding Behavior in Common Value English Auction
Abstract: In common value English auctions, bidders may have different level of private information toward the selling item. Studying the such information asymmetry requires proper estimation of the value distribution.However, the same distribution of bids can be rationalized by many value distributions. Moreover, the same value distribution may lead to many different bid distributions due to multiple equilibria and model incompleteness.This paper overcomes the “many-to-many” correspondence utilizing moment inequalities implied by the bidder’s bidding history and develops a structural econometric model to estimate the value distributions. I use this structural model to study the effect of information asymmetry on agent’s bidding behavior. In addition, this paper proposes a parametric approach for testing the information structure. The paper finds that the information premium mainly comes from the informed bidder’s screening effect and is independent of the number of participants. Applying the data from Chinese Justice Auction, I find that the noisy part in private signal is very large. The large noisy part reduces the selling revenue.
Product design improvement for Long-Term Care Insurance Market PDF
Abstract: Using a modified Brown and Finkelstein (2008) model of long-term care insurance purchase decisions, we evaluate catastrophic long-term care insurance policies that cover the tail risk of long-term care costs at affordable premiums. Under our baseline model, we show theoretically that introducing catastrophic policies will induce 11 percent of middle-income men and 3 percent of middle-income women to initiate insurance coverage. As a result, Medicaid costs will be reduced by 0.20 percent and 0.19 percent for men and women, respectively.
Home Security or Social Security, Which one is better for Long Term Growth ?
Abstract: China has long history of family-based support and security, functioning part of intergeneration welfare transfer as social security system. Considering the pros and cons in both family and social security systems, it is crucial to design the optimal security system to improve human capital accumulation and guarantee long term economics growth. On the other side, education investment and population policy also alter distribution of human capital accumulation. Through three period OLG model, this paper finds that given current education and population policy, the performance of different policies depends on the critical parameters. Applying numerical estimation simulation, I find that pay as you go system plus family-based security can obtain optimal balance growth path. But it increases risks on fiscal budget.