Dissertation Defense: Weiwei Zheng

Three Essays on Market Institutions

Friday, July 24, 2020 11:00 AM to 12:30 PM
Webex Meeting

 

The College of Humanities and Social Sciences is pleased to announce the following dissertation defense:

Weiwei Zheng
Economics
Major Professor: Dr. Cesar A Martinelli

Three Essays on Market Institutions

Friday, July 24, 2020
11:00 AM - 12:30 PM
George Mason University
Webex Meeting (details below)

This dissertation focuses on the equilibrium and efficiency of market institutions, a major determinant of market outcomes. The three chapters of the dissertation study market institutions in the presence of classic challenges: incomplete contracts, few traders, and incomplete information.

Chapter 1 compares two mechanisms, posted-offer and posted-bid, in a procurement setting with incomplete contracts.  Reciprocity has been identified in recent literature as a behavioral trait that mitigates moral hazard problems in the presence of incomplete contracts, along with repeated interactions and reputation concerns. This study builds a model of reciprocity based on inequality aversion, and takes it to the lab.  In the laboratory experiment, the posted-offer mechanism induces higher level of inequality aversion on sellers, resulting in higher efficiency than the posted-bid mechanism.

Chapter 2 studies minimal conditions for competitive behavior with few agents, adapting price-quantity strategic market games to an indivisible good environment, and taking it to the lab. In the proposed mechanism, all Nash equilibrium outcomes with active trading are competitive if and only if there are at least two buyers and two sellers willing to trade at every competitive price. In the laboratory experiment, this condition is enough to induce competitive results. Moreover, the performance of a sealed-bid auction following the rules of the strategic market game approaches that of its dynamic counterpart, the double auction, over time.

Chapter 3 surveys the theoretical and experimental literature on the k-double auction. A k-double auction is a sealed-bid call market. When agents' values of a commodity are private information, this institution features a convergence to efficient outcome in equilibria as the size of the market grows, supporting the use of Walrasian model as an asymptote of market outcomes in the absence of complete information. This chapter includes a history of the development of the theory, a summary of methods and results, the use in experimental economics, and the relation to other mechanisms.

All members of the George Mason University community are invited to attend.

 

Meeting Information

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