Final Oral Examination for the Degree of Doctor of Philosophy of Rebecca Elskamp

Posted on Tuesday, December 06, 2016

Interested Members of the University Community are Invited to Attend the Final Oral Examination for the Degree of Doctor of Philosophy of:

Rebecca Elskamp of the Department of Food, Agricultural and Resource Economics     

on Tuesday, December 13th, 2016 at 10:00 a.m. in Room 101, J.D. MacLachlan Bldg.
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ABSTRACT - Bidding Behaviour in Multi-Unit Auctions: Three Essays

This thesis contains three essays on the topic of bidding behaviour in multi-unit auctions. The first essay develops and experimentally tests multi-unit auction theory to identify the effects of "scaling up" multi-unit auction environments on individual bidding behaviour.  A uniquely tractable environment is developed that leads to the construction of uniform auctions of different scales, where the prediction is that risk neutral bidders' bids on the last unit they demand are independent of scale.   Two main effects were observed in the experimental data. Regardless of scale, bidders were found to bid more aggressively than predicted by the theory.  Secondly, small scale effects were observed, as bids were more aggressive in the small scale relative to the larger scale treatment. The theoretical consequences of risk aversion, joy of winning, and anticipated regret are analyzed to explain these deviations from predictions. 

 The second essay provides empirical evidence on how economic agents converge to optimality.  Learning direction theory is applied to bidding behaviour from the Ontario dairy quota auction, following a change in pricing rule from uniform to discriminatory. Two dimensions of bidding behaviour are examined at the individual bidder level, bid prices and number of price-quantity bid pairs.  Adjustments in bidding behaviour are broadly consistent with the ex-post rationality. Experience acquired under the discriminatory pricing rule is found to have diminishing effects on adjustments made to bidding behaviour, consistent with bidders converging towards optimality.

 The third essay examines the effect of two simultaneous policy changes, implemented in the Ontario dairy quota auction, to determine whether these changes were successful in achieving performance goals.  Results of a series of regression models indicate that these two policy changes had no effect on clearing prices.  Rather, these two policy changes were found to significantly reduce revenue from quantity purchased, total quantity transferred and total quantity offered.  The combination of a significant reduction in bid prices and individual quantity demanded, paralleled by an increase in individual quantity offered appears to have been the underlying mechanisms, in terms of individual bidding/offering behaviour, through which the these two policies failed to meet performance goals.

Examination Committee:
Alan Ker – Advisory Committee, FARE
Rene Kirkegaard – Advisory Committee, Economics and Finance
John Cranfield – Examination Chair, FARE
Henry Thille – Internal Examiner, Department of Economics and Finance
Georgia Kosmopoulou  – External Examiner, Professor, Department of Economics, University of Oklahoma    

Thesis Committee:
Alan Ker – Advisor, FARE
Alfons Weersink – Advisory Committee, FARE
Bram Cadsby – Advisory Committee, Economics and Finance
Rene Kirkegaard – Advisory Committee, Economics and Finance