Copyright (c) 2008 All rights reserved. http://works.bepress.com/john_morgan Recent documents in John Morgan en-us Sun, 05 Oct 2008 15:32:39 PDT 3600 http://works.bepress.com/john_morgan/18 http://works.bepress.com/john_morgan/18 Thu, 12 Jun 2008 15:00:16 PDT John Morgan presents a radical proposal to sell voting rights at the IMF and redistribute power through market mechanisms instead of by formula. John Morgan F33 http://works.bepress.com/john_morgan/17 http://works.bepress.com/john_morgan/17 Thu, 12 Jun 2008 14:49:34 PDT In many settings, including venture capital financing, mergers and acquisitions, and lease competition, the structure of the contracts (debt versus equity) over which firms compete differs. Furthermore, the structure of the contract affects the future incentives of the firm to engage in value-creating activities by potentially diluting effort or investment incentives. We study, both theoretically and in the lab, the performance of debt and equity auctions in the presence of both private information and hidden effort. We show that the revenues to sellers in debt and equity auctions differ systematically depending on the returns to entrepreneurial effort. We then test these revenue rankings and other predictions of the theory using controlled laboratory experiments where we vary the returns to effort. While the bidding behavior, particularly in equity auctions, differs from the dominant strategy prediction of the theory, the predicted revenue rankings are borne out in the lab. John Morgan http://works.bepress.com/john_morgan/16 http://works.bepress.com/john_morgan/16 Tue, 02 Oct 2007 09:10:24 PDT We study vote buying by competing interest groups in a variety of electoral and contractual settings. While increasing the size of a voting body reduces its buyability in the absence of competition, we show that larger voting bodies may be more buyable than smaller voting bodies when interest groups compete. In contrast, imposing the secret ballot-- which we model as forcing interest groups to contract on outcomes rather than votes-- is an e¤ective way to ght vote buying in the presence of competition, but much less so in its absence. We also study more sophisticated vote buying contracts. We show that, regardless of competition, the option to contract on both votes and outcomes is worthless, as it does not a¤ect buyability as compared to contracting only on votes. In contrast, when interest groups can contract on votes and vote shares, we show that voting bodies are uniquely at risk of being bought. John Morgan http://works.bepress.com/john_morgan/15 http://works.bepress.com/john_morgan/15 Tue, 02 Oct 2007 09:10:23 PDT Timing is crucial in situations ranging from currency attacks, to product introductions, to starting a revolution. These settings share the feature that payo®s depend critically on the timing of a few other key players--and their moves are uncertain. To capture this, we introduce the notion of clock games and experimentally test them. Each player's clock starts on receiving a signal about a payo® relevant state variable. Since the timing of the signals is random, clocks are de-synchronized. A player must decide how long, if at all, to delay his move after receiving the signal. We show that (i) equilibrium is always characterized by strategic delay--regardless of whether moves are observable or not; (ii) delay decreases as clocks become more synchronized and increases as information becomes more concentrated; (iii) When moves are observable, players "herd" immediately after any player makes a move. We then show, in a series of experiments, that key predictions of the model are consistent with observed behavior. John Morgan http://works.bepress.com/john_morgan/14 http://works.bepress.com/john_morgan/14 Tue, 02 Oct 2007 09:10:22 PDT In many settings, including venture capital financing, mergers and acquisitions, and lease competition, the structure of the contracts (debt versus equity) over which firms compete differs. Furthermore, the structure of the contract affects the future incentives of the firm to engage in value-creating activities by potentially diluting effort or investment incentives. We study, both theoretically and in the lab, the performance of open outcry debt and equity auctions in the presence of both private information and hidden effort. We show that the revenues to sellers in debt and equity auctions differ systematically depending on the returns to entrepreneurial effort. We then test these revenue rankings and other predictions of the theory using controlled laboratory experiments where we vary the returns to effort. While the bidding behavior, particularly in equity auctions, differs from the dominant strategy prediction of the theory, the predicted revenue rankings are borne out in the lab. John Morgan http://works.bepress.com/john_morgan/13 http://works.bepress.com/john_morgan/13 Tue, 02 Oct 2007 09:10:20 PDT The market values of online platforms, such as Yahoo, stem from their ability to monetize the clicks they generate for firms advertising on their sites. We exploit a unique dataset on clicks from one of Yahoo's price comparison sites to estimate the determinants of clicks received by online retailers. We find that a firm enjoys a 60% jump in its clicks when it offers the lowest price at the site. This discontinuity is consistent with a variety of models that have been used to rationalize the price dispersion observed in online markets. We also show that one may use estimates of the determinants of a firm's clicks to obtain bounds on its underlying demand parameters, including own- and cross-price elasticities. Our results have potentially significant ramifications for online retailers, platforms, and policymakers: Failure to account for discontinuities distorts parameter estimates by 50 to 100 percent. Michael R. Baye http://works.bepress.com/john_morgan/12 http://works.bepress.com/john_morgan/12 Tue, 02 Oct 2007 09:10:19 PDT The recent theoretical literature suggests that consumer myopia may lead firms to profitably suppress or shroud some attributes of the price. Empirical and experimental data also suggest that sellers gain by transferring a larger fraction of the price to the shrouded attributes. However, alternative theories, including mental accounting, could also explain these framing effects. Using field experiments, we show that the impact of this price framing on revenue vanishes when we explicitly reveal the prices of different attributes, while the framing effect persists only when we shroud some price attributes. Then, using data from a natural experiment that occurred on eBay, we find that when the price of a secondary attribute such as the shipping fee is prominently displayed, the framing effect also disappears. Moreover, average revenues for sellers seem to have increased after this institutional change. Tanjim Hossain http://works.bepress.com/john_morgan/11 http://works.bepress.com/john_morgan/11 Tue, 02 Oct 2007 09:10:17 PDT The equilibrium model of Ellison, Fudenberg, and Möbius (2004) predicts that, if two competing auction sites are coexisting, then seller revenues and buyer-seller ratios on each site should be approximately equal. We examine these hypotheses using field experiments selling identical items on the eBay and Yahoo auction sites. We find evidence that is inconsistent with the equilibrium hypotheses, and suggest that the eBay-Yahoo market is in the process of tipping. Robust statistical tests indicate that revenues on eBay are consistently 20 to 70 percent higher than those on Yahoo. In addition, eBay auctions attract approximately two additional buyers per seller than equivalent Yahoo auctions. We also vary the Yahoo ending rule from a hard close to soft close but find no statistically or economically significant changes in revenue or numbers of bidders. Moreover, the magnitude of the revenue and buyer-seller ratio disparities remain inconsistent with the notion of equilibrium coexistence even after accounting for various differentiators between the sites. Jennifer Brown http://works.bepress.com/john_morgan/10 http://works.bepress.com/john_morgan/10 Tue, 02 Oct 2007 09:10:16 PDT Alan S. Blinder http://works.bepress.com/john_morgan/9 http://works.bepress.com/john_morgan/9 Fri, 05 Jan 2007 15:40:58 PST John Morgan