The chapters of this dissertation explore related aspects of the procurement of conservation services from private landowners. In the first chapter, heuristic laboratory experiments reveal the impact of potential government regulation on strategic forces and efficiency properties in conservation procurement auctions. In the second chapter, data from past procurement auctions are analyzed to discover the existence and magnitude of premiums received by auction participants. The first Chapter, “Procurement Auctions Under Regulatory Threat,” examines how strategic forces and efficiency properties are impacted in auctions for the procurement of environmental services when a threat of regulation is levied. Laboratory experiments examining different regulatory environments demonstrate that a threat of regulation will reduce the amount of public funds necessary to purchase a given level of environmental services. However, adverse selection costs and equity are negatively impacted by threat implementation. The second Chapter, “Estimating Bid Inflation in Procurement of Environmental Services,” studies the size of premiums received by program participants in conservation programs. Predictions informed by economic literature and theory elicit the underlying value distribution for a unique dataset of procurement auctions. Average premiums for auction participants range from almost 50 percent to less than 1 percent across auction periods and institutions. The results demonstrate that both repetition and rule variation may improve the efficiency of procurement auctions. The auctions studied here are shown to yield efficiency improvements of more than 32 percent over standard fixed-payment schemes for service procurement.

In my dissertation, I investigate the effects of budget-constraints in multi-unit auctions. This is done in three parts. First, I analyze a case where all bidders have a common budget constraint. Precisely, I analyze an auction where two units of an object are sold at two simultaneous, sealed bid, first-price auctions, to bidders who have demand for both units. Bidders differ with respect to their valuations for the units. All bidders have an identical budget constraint which binds their ability to spend in the auction. I show that if valuation distribution is atom-less, then their does not exist any symmetric equilibrium in this auction game. In the second and third parts of my thesis, I analyze the sale of licenses for the right to drill for oil and natural gas in the Outer Continental Shelf (OCS) of the United States. These sales are conducted using simultaneous sealed-bid first-price auctions for multiple licenses, each representing a specific area (called a tract). Using aspects of observed bidding-behavior, I first make a prima facie case that bidders are budget-constrained in these auctions. In order to formalize this argument, I develop a simple extension of the standard model (where bidders differ in their valuations for the objects) by incorporating (random) budgets for the bidders. The auction-game then has a two-dimensional set of types for each player. I study the theoretical properties of this auction, assuming for simplicity that two units are being sold. I show that this game has an equilibrium in pure strategies that is symmetric with respect to the players and with respect to the units. The strategies are essentially pure in the sense that each bidder-type has a unique split (up to a permutation) of his budget between the two auctions. I then characterize the equilibrium in terms of the bid-distribution and iso-bid curves in the value-budget space. I derive various qualitative features of this equilibrium, among which are: (1) under mild assumptions, there always exist bidder-types who submit unequal bids in equilibrium, (2) the equilibrium is monotonic in the sense that bidders with higher valuations prefer more unequal splits of their budgets than bidders with lower valuations and the same budget-level. With a formal theory in place, I carry out a quantitative exercise, using data from the 1970 OCS auction. I show that the model is able to match many aspects of the data. (1) In the data, the number of tracts bidders submit bids on is positively correlated with budgets (an R² of 0.84), even though this relationship is non-monotonic; my model is able to capture this non-monotonicity, while producing an R² of 0.89 (2) In the data, the average number of bids per tract is 8.21; for the model, this number is 10.09. (3) Auction revenue in the data was $1.927 billion; the model produced a mean revenue of $1.944 billion

This paper studies the effects of auction mechanisms on the average price of auction results of Shanghai car license plate from 2004 to 2018. We construct two linear regression models and find that an iterated multi-unit auction has a lower efficiency than a seal-bid discriminatory multi-unit auction. We also find that the pre-set price-ceiling is positively correlated with the average winning price. These results suggest that the government can potentially manipulate auction results through the design of the auction mechanism, and through the setting of warning price as a price ceiling.

Research on auctions that involve more than one identical item for sale was,almost non-existing in the 90’s, but has since then been getting increasing attention. External incentives for this research have come from the US spectrum, sales, the European 3G mobile-phone auctions,  and Internet auctions. The policy relevance and the huge amount of money involved in many of them have helped the theory and experimental research advance. But in auctions where values are equal across bidders, common value auctions, that is, when the value depends on some outside parameter, equal to all bidders, the research is still embryonic. This thesis contributes to the topic with three studies. The first uses a Bayesian game to model a simple multi-unit common value auction, the task being to compare equilibrium strategies and the seller’s revenue from three auction formats; the discriminatory, the uniform and the Vickrey auction. The second study conducts an economic laboratory experiment on basis of the first study. The third study comprises an experiment on the multi-unit common value uniform auction and compares the dynamic and the static environments of this format. The most salient result in both experiments is that subjects overbid. They are victims of the winner’s curse and bid above the expected value, thus earning a negative profit. There is some learning, but most bidders continue to earn a negative profit also in later rounds. The competitive effect when participating in an auction seems to be stronger than the rationality concerns. In the first experiment, subjects in the Vickrey auction do somewhat better in small groups than subjects in the other auction types and, in the second experiment, subjects in the dynamic auction format perform much better than subjects in the static auction format; but still, they overbid. Due to this overbidding, the theoretical (but not the behavioral) prediction that the dynamic auction should render more revenue than the static fails inthe second experiment. Nonetheless, the higher revenue of the static auction comes at a cost; half of the auctions yield negative profits to the bidders, and the winner’s curse is more severely widespread in this format. Besides, only a minority of the bidders use the equilibrium bidding strategy.The bottom line is that the choice between the open and sealed-bid formats may be more important than the choice of price mechanism, especially in common value settings.

A recent pursuit of the auction design literature has been the development of an auction mechanism which performs well in a multi-good setting, when the goods are not substitutes. This work began in earnest with the Federal Communications Commission spectrum license auctions in the early nineties and continues to this day. In a setting in which goods are not substitutes, the value of one good depends nonnegatively on the quantities of other goods that are won. This type of interdependent value structure has proven difficult to account for in auction design. However, the need for mechanisms that account for such a value structure hinges on the magnitude of the interdependence, whose computation is an empirical exercise. I identify a setting in which to perform this computation. I develop an empirical methodology that allows me to recover bidders' value functions in a multi-good auction setting. This methodology allows me to assess the magnitude of any interdependence in the goods? value structure. Since the auction setting that I analyze is a variation of the standard uniform price auction, which has been adapted for a multi-good setting, I am able to measure the benefit of having a direct revelation mechanism. This counterfactual study is performed by maximizing the value of the auction using the recovered bidder value functions. I find evidence that there is an interdependent value structure in the setting. The counterfactual auction finds that the standard uniform price auction, adapted to a multi-good setting, performs poorly in the presence of such a value structure. The setting for this analysis is an auction for financial transmission rights held in Texas in 2002. The auction involved twenty two firms and collected almost $70 million in revenue. This research is the first to empirically assess efficiency in this type of auction setting.

Shutdowns in a chemical processing plant are detrimental both to plant economics and critical product characteristics. These situations can be due to routine maintenance, or due to the more extreme case of equipment failure due to wear. Nevertheless, both are cases of non-normal plant operation, and are often unavoidable. These situations are complicated further when many units are linked, and subjected to a high degree of integration. In this case, the shutdown of any unit within the plant can have immediate and potentially severe impacts on other areas of the operation. Since these events are unavoidable, the challenge is to minimize their economic impact through careful design of operating practices, and potentially plant design retrofits. This thesis focuses on developing generic and systematic methods of determining economically optimal operating policies and plant designs in the face of failures in multi-unit operations. This includes determining the optimal trajectory of critical plant variables (flows through units, flows between units, buffer tank levels, etc.), as well as determining whether plant design changes would improve plant economics during such events. Such ventures lead to mixed-integer dynamic optimization (MIDO) problems. A dynamic model of the process is presented, accounting for the major flows of process materials through units, between units, as well as the accumulation of these in the intermediate buffer capacities. The approach used was to assume that the processing units operated at pseudo-steady-state, with dynamics confined to the intermediate buffer capacities. All models developed were based on a combination of empirical and fundamental elements. For use of the model in an optimization study, a simultaneous approach, in which the differential equations are discretized and included as equality constraints, was employed. This yielded a nonlinear optimization problem involving only algebraic equations. Optimal responses to scenarios involving planned maintenance shutdowns, as well as unplanned shutdowns (unit failures) were computed, with plant economics used as the merit function. Sensitivity to parameters such as preparation time, shutdown length, and restoration time were studied. In all cases, it was desired to maximize plant economics, while maintaining a smooth operation. While several methods are available for use in a multi-criterion optimization problem, a two-tiered approach was developed and applied in which the plant economics were maximized first, and input usage subsequently minimized as a secondary objective. After identifying key failure scenarios through a review of industrial data and downtime reports, a multiple-model formulation was developed involving the probability distribution of failure scenarios. Optimal steady-state operating levels for the buffer capacities were computed. This formulation is then extended to a mixed-integer programming problem in which the addition of extra buffer capacity is included as a decision variable. / Thesis / Master of Applied Science (MASc)

Research on auctions that involve more than one identical item for sale was,almost non-existing in the 90’s, but has since then been getting increasing attention. External incentives for this research have come from the US spectrum, sales, the European 3G mobile-phone auctions,  and Internet auctions. The policy relevance and the huge amount of money involved in many of them have helped the theory and experimental research advance. But in auctions where values are equal across bidders, common value auctions, that is, when the value depends on some outside parameter, equal to all bidders, the research is still embryonic. This thesis contributes to the topic with three studies. The first uses a Bayesian game to model a simple multi-unit common value auction, the task being to compare equilibrium strategies and the seller’s revenue from three auction formats; the discriminatory, the uniform and the Vickrey auction. The second study conducts an economic laboratory experiment on basis of the first study. The third study comprises an experiment on the multi-unit common value uniform auction and compares the dynamic and the static environments of this format. The most salient result in both experiments is that subjects overbid. They are victims of the winner’s curse and bid above the expected value, thus earning a negative profit. There is some learning, but most bidders continue to earn a negative profit also in later rounds. The competitive effect when participating in an auction seems to be stronger than the rationality concerns. In the first experiment, subjects in the Vickrey auction do somewhat better in small groups than subjects in the other auction types and, in the second experiment, subjects in the dynamic auction format perform much better than subjects in the static auction format; but still, they overbid. Due to this overbidding, the theoretical (but not the behavioral) prediction that the dynamic auction should render more revenue than the static fails inthe second experiment. Nonetheless, the higher revenue of the static auction comes at a cost; half of the auctions yield negative profits to the bidders, and the winner’s curse is more severely widespread in this format. Besides, only a minority of the bidders use the equilibrium bidding strategy.The bottom line is that the choice between the open and sealed-bid formats may be more important than the choice of price mechanism, especially in common value settings.

Most studies of gustatory coding have been performed in either anesthetized or awake, passively stimulated rats. In this dissertation the influences of behavioral state on gustatory processing in awake rats are described. In the first set of experiments, the effects of non-contingent tastant delivery on the chemical tuning of single neurons were explored. Tastants were delivered non-contingently through intra-oral cannulas to restrained, non water-deprived rats while single unit responses were recorded from the gustatory cortex (GC). As the subjects' behavior progressed from acceptance to rejection of the tastants, the chemical tuning of the neurons changed as well. This suggests that the subjects' behavioral state powerfully influences gustatory processing. In the second set of experiments, rats were trained to lick for fluid reinforcement on an FR5 schedule while single unit activity was recorded from GC. In this case, the chemical tuning was much more stable. Under this paradigm, chemosensory responses were rapid (~ 150 ms) and broadly tuned. In the third study, it was found that ensembles of GC neurons could discriminate between tastants and their concentrations on a single trial basis, and such discrimination was accomplished with a combination of rate and temporal coding. Ensembles of GC neurons also anticipated the identity of the upcoming stimulus when the tastant delivery was predictable. Finally, it was found that ensembles of GC neurons could discriminate between the bitter stimuli nicotine and quinine. Nicotine is both a bitter tastant and a trigeminal stimulant, and when the acetylcholine receptors in the lingual epithelium were blocked with mecamylamine, the ensembles failed to discriminate nicotine from quinine.

Smart Grid has emerged a very important concept in modern power systems. The integration of different loads such as residential, commercial and industrial into the smart grid and their optimal operation has a significant effect on the system's reliability, stability, peak power demand and energy price. This work presents the mathematical modeling of a Centralized Temperature Control System (CTCS) of a Multi-Unit Residential Building (MURB) and its optimal operation considering electricity prices and weather variations. The model considers comfort levels, preference settings and activity of residents in different units of the building to determine the optimal operation schedules of the CTCS, minimizing its total energy consumption cost. Multi-objective operation of the MURB is also investigated when residents in different units have conflicting interests, and the impact of such conflicting preferences on the operation of CTCS is analyzed. A case-study on optimal energy management of a single unit house considering net-metering is also presented. The proposed CTCS model is a Mixed Integer Non Linear Programing (MINLP) model, where some of the constraints are linearized to reduce the computational complexity arising from the non-linearity, for real-time applications. The model is studied for various customers' preferences using a realistic MURB model. Simulation results show that significant cost savings can be achieved using the proposed mathematical model.

We experimentally study the effects of allotment - the division of an item into homogeneous units - in independent private value auctions. We compare a single-item, first-price auction with two equivalent treatments with allotment: a two-unit discriminatory auction and two simultaneous single-unit first-price auctions. We find that allotment mitigates overbidding, with this effect being stronger in the discriminatory auction. In the allotment treatments, we observe large and persistent bid spreading. Across treatments, the discriminatory auction is the least efficient and generates the lowest revenue.