In common-value auctions and contests economic agents often have varying levels of information regarding the value of the good to be allocated. Using theoretical and experimental analysis, I examine the effect of such information asymmetry on behavior. Chapter II considers a model in which players compete in two sequential contests. The winner of the first contest (the incumbent) privately observes the value of the prize, which provides private information if the prizes are related. Relative to the case where the prizes are independent, the incumbent is strictly better off, and the other contestants (the challengers) are strictly worse off. This increases the incentive to win the first contest such that the sum of expected effort over both contests increases relative to the case of independent prizes. Chapter III experimentally considers the role of asymmetric information in first-price, sealed-bid, common-value auctions. Bidders who observe a private signal tend to overbid relative to Nash equilibrium predictions. Uninformed bidders, however, tend to underbid relative to the Nash equilibrium. Chapter IV examines asymmetric information in one-shot common-value all-pay auctions and lottery contests from both experimental and theoretical perspectives As predicted by theory, asymmetric information yields information rents for the informed bidder in both all-pay auctions and lottery contests.

Diss. Stockholm : Handelshögskolan, 2006.

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This dissertation presents research on issues of competition and market structure in economics, and in particular considers the role of asymmetric information in firm competition. This includes asymmetric information among firms, between firms and regulators and between consumers and firms. In the course of this I adapt and expand on recently developed methods for solving, estimating and simulating dynamic models of firm behavior. Finally, this dissertation focuses attention on firms' motivations for and the consequences of horizontal expansion, both in the form of horizontal mergers in a differentiated goods market and in the form of horizontal chain affiliation. This research proceeds in three steps. In Chapter 2 I explore and document consumers growing ability to use new online reputation mechanisms to both share their experiences with a wide variety of firms and gain information from other consumers' shared experiences. In Chapter 3 I present a theoretical model of horizontal mergers in a dynamic industry setting. I use this model to answer a question that increasingly interests antitrust policymakers concerned with innovation: In a concentrated industry, does allowing rival firms to merge increase or decrease total investment? This model has two important features. First, the environment is fully dynamic, and second, I allow mergers to occur endogenously. In Chapter 4, I combine many of the concepts from Chapters 2 and 3 into on piece of research to address the question: why do firms organize into chains? I use of combination of reduced form and structural dynamic methods to examine possible answers to this question in the context of the hotel industry. In particular, I take advantage of recent advances in estimating dynamic industry models to show that there is no evidence in favor of the traditional explanation for horizontal expansion, economies of scale or cost efficiencies. Instead, using a detailed examination of hotel revenue along with firm and market data, I show that chain firms have a substantial demand side advantage resulting from the fact that consumers frequently have little information on firm quality. In this industry, then, asymmetric information seems to not only matter for chain affiliation, it is the only factor that matters. / text

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This thesis focuses on private information dissemination and its impacts on financial markets. Specifically, we study issues arising when there are skilled individuals able to extract anticipative information about future prices. The first model considers a continuous time economy that is populated by informed and uninformed investors as well as active unskilled investors, and investigates the existence of noisy rational expectations equilibria and their properties. Equilibria are derived in closed form and their properties analyzed. Informed trading is found to reduce price volatility. The second model is based on the idea that besides exploiting their private information for trading purposes, informed agents might want to offer wealth management services to uninformed investors in exchange for a fee. A market for active funds emerges, and the process of anticipative information dissemination is endogenized. In this chapter, heterogenous risk averse investors can invest in the active fund. Low risk tolerance investors are found to be strictly better off with the active fund. Fund size is not a reliable indicator of managerial skill. The market reacts to the manager's increasing risk-taking behavior by reducing the volatility and risk premium.

We present three models of the role of asymmetric information in environmental protection. Chapter one considers the market for a green credence good - a good whose environmental characteristics are not observed by the consumer, even ex post - in the presence of environmentally-conscious consumers. Producers may choose to advertise their products. However, if communication is not regulated it can degenerate into "cheap talk". We explore the scope for credible transmission of environmental information by green producers, and the limits on it. In Chapter two we develop some similar themes in an experimental setting, with the focus again on consumer reactions to producer-provided information on the environmental attributes of goods, and the potential role of government to improve social welfare by manipulating the use of certification. In Chapter three the focus is somewhat different, whilst maintaining the theme of the role of information asymmetries in an environmental policy setting. In the model here a regulator has to decide whether or not to regulate a polluting activity with imperfect information regarding the net benefits of so doing. In making her decision, the regulator can listen to an adviser, who may or may not be biased. We look at how the decision maker can exploit the advisories incentive to build reputation to achieve better decisions. As a whole the thesis further underscores and illustrates the critical role that availability and distribution of information plays in policy making aimed at environmental protection.

We consider a pure exchange economy with asymmetric information where individual behavior exhibits ambiguity aversion along the line of maximin expected utility decision making. For such economies we introduce different notions of maximin value allocations. We also introduce a strong notion of (maximin) incentive compatibility. We prove existence and incentive compatibility of the maximin value allocation, when the economy's state space is either finite or non-finite. In the latter case, we provide two different existence results: assuming first countable and then uncountable infinitely many states of nature of the world. We conclude that unlike the Bayesian value allocation approach, incentive compatibility is related to efficiency rather than to direct exchange of information.

<p><strong><p>Title</p><p>The anatomy of financial crises and the current one´s effects on the Swedish<strong> economy.</strong></p><p>Authors</p>Ifete Binaku and Niklas Holmström<strong><p>Background</p></strong></strong></p><p>The subprime crisis started in the United States, but was soon transmitted to other<strong> </strong>countries and even to Sweden. The impact of the financial crisis has had negative consequences for the Swedish real economy, especially in its output. Since Sweden is a big exporting country, its macro economy has been negatively affected by the present global financial crisis.</p><p><strong><p>Purpose</p></strong></p><p>We are interesting to illustrate how the theories can explain the causes and effects<strong> </strong>of financial crises. Therefore, the aim of this study is simply to acquire knowledge on how the impacts on the Swedish economy can be described by theories on financial crises.<strong> </strong></p><p> </p><p>Method</p><p> </p><p>The theoretical models guided our choices of the financial and economic<strong> i</strong>ndicators. The thesis employed a quantitative research approach where the empirical materials are collected from the yearly data period: 2005 to 2009. The secondary analysis has been applied where yeas 2005 to 2009 were selected in order to get an overview of variables developments before financial crises started and in meantime.</p><p><strong><p>Results</p></strong></p><p>Our findings showed that the financial crisis has affected the Swedish economy negatively. Furthermore, the repercussion on the Swedish economy can be better explained by certain parts of the theories combined, than by one theory left alone.</p><p> </p>

Title The anatomy of financial crises and the current one´s effects on the Swedish economy. Authors Ifete Binaku and Niklas HolmströmBackground The subprime crisis started in the United States, but was soon transmitted to other countries and even to Sweden. The impact of the financial crisis has had negative consequences for the Swedish real economy, especially in its output. Since Sweden is a big exporting country, its macro economy has been negatively affected by the present global financial crisis. Purpose We are interesting to illustrate how the theories can explain the causes and effects of financial crises. Therefore, the aim of this study is simply to acquire knowledge on how the impacts on the Swedish economy can be described by theories on financial crises.   Method   The theoretical models guided our choices of the financial and economic indicators. The thesis employed a quantitative research approach where the empirical materials are collected from the yearly data period: 2005 to 2009. The secondary analysis has been applied where yeas 2005 to 2009 were selected in order to get an overview of variables developments before financial crises started and in meantime. Results Our findings showed that the financial crisis has affected the Swedish economy negatively. Furthermore, the repercussion on the Swedish economy can be better explained by certain parts of the theories combined, than by one theory left alone.