Dan Quint’s Research
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Publications
(peer-reviewed econ)
Daniel Quint and Ken Hendricks, A Theory of Indicative
Bidding, AEJ: Microeconomics 10
(2), May 2018 (Appendix)
When
selling a business by auction, investment banks frequently use indicative bids
– non-binding preliminary bids – to select a limited number of bidders to
participate. We show that if
participation is costly, indicative bids can be informative: symmetric
equilibrium exists in weakly-increasing strategies, but bidders “pool” over a
finite number of bids, so the highest-value bidders are not always
selected. We construct such equilibria
for both first-price and English auctions.
We also characterize equilibrium play when the number of potential
bidders is large, and show that revenue and total surplus are both higher than
when entry is unrestricted.
Daniel Quint, Common
Values and Low Reserve Prices, Journal
of Industrial Economics 65 (2), June 2017 (Appendix)
I
show that the benefit of a high reserve price in a common-values ascending
auction is lower than in the observationally-equivalent private values
setting. Put another way, when bidders
actually have common values, empirical estimation based on a private values
model will overstate the value of a high reserve price. Via numerical examples, I show that this
result typically applies to the level of the optimal reserve price as well, and
often to the benefit of any reserve
price, not just a high one. With common
values, the optimal reserve price can even be below the seller’s valuation, which is impossible with private
values.
Andrés Aradillas-López, Amit
Gandhi and Daniel Quint, A Simple Test for Moment
Inequality Models with an Application to English Auctions, Journal of Econometrics 194, September
2016 (Appendix)
Testable
predictions of many economic models involve inequality comparisons between
transformations of nonparametric functionals. We introduce an econometric test for these
types of restrictions based on one-sided Lp-statistics that
adapt asymptotically to the contact sets without having to directly estimate
them. Monte Carlo experiments show that
our test is less conservative than procedures based on least-favorable
configurations and has power comparable to other contact-set based
procedures. As an application, we test
for interdependence of bidders’ valuations in ascending auctions. Using USFS timber auction data we reject the
Independent Private Values model in favor of a model of correlated private
values.
Daniel Quint, Imperfect Competition with
Complements And Substitutes, Journal of Economic Theory 152, July 2014 (Appendix)
I
study price competition in settings where ends products are combinations of
components supplied by different monopolists, nesting standard models of
perfect complements and imperfect substitutes.
I show sufficient conditions for a discrete-choice demand system to
yield demand for each product which is log-concave in price, and has
log-increasing differences in own and another product’s price, leading to
strong comparative statics results. Many
results familiar from simple models, like the price effects of mergers or
changes in marginal costs, extend naturally to this more complex setting.
Daniel Quint, Pooling With Essential And Nonessential Patents, AEJ: Microeconomics 6 (1), February 2014
Several
recent technological standards were accompanied by patent pools - arrangements to license relevant intellectual
property as a package. A key distinction made by regulators - between patents essential to a standard and patents with
substitutes - has not been addressed in the theoretical literature. I show that
pools of essential patents are always welfare-increasing, while pools which
include nonessential patents can be welfare-reducing - even pools which are
limited to complementary patents and are stable under compulsory individual
licensing. If pools gain commitment power and price as Stackelberg
leaders, this reduces, and can even reverse, the gains from welfare-increasing
pools.
Andrés Aradillas-López, Amit
Gandhi and Daniel Quint, Identification
and Inference in Ascending Auctions with Correlated Private Values, Econometrica 81
(2), March 2013
(Appendix)
We introduce and apply a new nonparametric approach to identification and inference on data from ascending auctions. We exploit variation in the number of bidders across auctions to nonparametrically identify useful bounds on seller profit and bidder surplus using a general model of correlated private values that nests the standard IPV model. We also translate our identified bounds into closed form and asymptotically valid confidence intervals for several economic measures of interest. Applying our methods to much-studied U.S. Forest Service timber auctions, we find evidence of correlation among values after controlling for a rich vector of relevant auction covariates; this correlation causes expected profit, the profit-maximizing reserve price, and bidder surplus to be substantially lower than conventional (IPV) analysis of the data would suggest.
Daniel Quint, Looking
Smart versus Playing Dumb in Common-Value Auctions, Economic Theory 44 (3), September 2010
I compare the value of information acquired secretly with information acquired openly prior to a first-price common-value auction. Novel information (information which is independent of the other bidder's private information) is more valuable when learned openly, but redundant information (information the other bidder already has) is more valuable when learned covertly. In a dynamic game where a bidder can credibly signal he is well-informed without disclosing the content of his information, always signaling having novel information, and never signaling having redundant information, is consistent with (but not uniquely predicted by) equilibrium play. Full revelation of any information possessed by the seller increases expected revenue and is uniquely predicted in equilibrium.
Daniel Quint, Unobserved
Correlation in Private-Value Ascending Auctions, Economics Letters 100 (3), September 2008 (Example
and Extensions)
In private-value ascending auctions, the winner's willingness to pay is not observed, leading to underidentification of many econometric models. I calculate tight bounds on expected revenue and optimal reserve price for the case of symmetric and affiliated private values.
Guillermo Caruana, Liran Einav, and Daniel Quint, Multilateral Bargaining with Concession Costs, Journal of Economic Theory 132 (1), January 2007
This paper presents a new non-cooperative approach to multilateral bargaining. We consider a demand game with the following additional ingredients: (i) there is an exogenous deadline, by which bargaining has to end; (ii) prior to the deadline, players may sequentially change their demands as often as they like; (iii) changing one's demand is costly, and this cost increases as the deadline gets closer. The game has a unique subgame perfect equilibrium prediction in which agreement is reached immediately and switching costs are avoided. Moreover, this equilibrium is invariant to the particular order and timing in which players make demands. This is important, as multilateral bargaining models are sometimes too sensitive to these particular details. In our context, players with higher concession costs obtain higher shares of the pie; their increased bargaining power stems from their ability to credibly commit to a demand earlier. We discuss how the setup and assumptions are a reasonable description for certain real bargaining situations.
Daniel Quint and Liran Einav, Efficient Entry,
Economics Letters 88 (2), August 2005
We
present a dynamic entry game, in which entry costs become sunk gradually. In
equilibrium the most profitable firms enter, as they commit faster not to exit.
This rationalizes an equilibrium selection assumption often employed in the
empirical entry literature.
Working Papers
Cristián Hernández, Daniel Quint, and Christopher Turansick, Estimation in English
Auctions with Unobserved Heterogeneity (Apr 2019) – revise-and-resubmit, RAND Journal of Economics
We
propose a framework for identification and estimation of a private values model
with unobserved heterogeneity from bid data in English auctions, using
variation in the number of bidders across auctions, and extend the framework to
settings where the number of bidders is not cleanly observed in each
auction. We illustrate our method on
data from eBay Motors auctions. We find
that unobserved heterogeneity is important, accounting for two thirds of price
variation after controlling for observables, and that welfare measures would be
dramatically mis-estimated if unobserved
heterogeneity were ignored.
(supplants Quint, Identification in Symmetric English Auctions with Additively Separable Unobserved Heterogeneity)
Lars Boerner and Daniel Quint, Medieval Matching Markets
(Apr 2019) (Appendix)
We
study the implementation of brokerage regulations as allocation mechanisms in
wholesale markets in pre-modern Central Western Europe. We assemble a data set of 1609 sets of
brokerage rules from 70 cities. We find
that brokerage was primarily instituted as a centralized matchmaking mechanism,
with systematic variation in how brokers’ fees were calculated. Brokerage was more common in towns with
stronger economic activities – cities with larger populations, universities,
access to ports and more trade routes, and more politically autonomous
cities. Value-based fees were more
commonly used for highly heterogeneous goods, and volume-based fees were more
common for more homogeneous goods. We
introduce a simple theoretical model to study the brokers’ and traders’
incentives; we find that this empirical pattern in fees was broadly consistent
with the choices that would maximize total surplus on a product-by-product
basis, and that brokerage was more valuable in unbalanced markets (unequal
numbers of buyers and sellers).
(discussion of an earlier version on Al
Roth’s Market
Design blog and Economic
Logic.)
Christiaan van Bochove, Lars Boerner, and Daniel Quint, Anglo-Dutch
Premium Auctions in Eighteenth-Century Amsterdam (Jan 2017) (Appendix)
An
Anglo-Dutch premium auction (ADPA) is a two-stage auction, with a cash premium
paid to the first-stage winner. We study
such auctions used in the secondary securities market in 18th-century
Amsterdam – among the first uses of a structured market-clearing mechanism in
any financial market. Analysis of 16,854
securities sales in the late 1700s shows an empirical connection between
greater uncertainty in the security’s value and greater likelihood of a
second-stage bid; a simple theoretical model of equilibrium bidding predicts
the same connection. We argue the ADPA
appears well-suited for the particular challenges of this environment, and
represented an effective solution to a complex early market design problem.
Daniel Quint, A Simple
Example to Illustrate the Linkage Principle (Apr 2016)
I
present a numerical example illustrating the revenue-superiority of an “open”
over a “closed” auction format (the linkage principle), and use it to calculate
the magnitude of the effect.
Yuanchuan Lien and Daniel
Quint, Bidding
Reversals in a Multiple-Good Auction with Aggregate Reserve Price (Jan
2011) (Appendix)
In an
auction for two heterogeneous goods, we show an “aggregate” reserve price leads
to equilibria where bidders bid on one item to sabotage their own bid on the
other, and bids are decreasing in valuations over a certain range.
Other Publications
Daniel Quint, Patent
Pools, The New Palgrave Dictionary of
Economics Online, Eds. Steven Durlauf and
Lawrence Blume, Palgrave Macmillan, 2008
A
patent pool is an agreement by multiple patentholders
to share intellectual property among themselves or to license a portfolio of
patents as a package to outsiders. Patent pools were common in the
Daniel Quint, Leiba Rodman, and
Ilya Spitkovsky, New Cases of Almost Periodic
Factorization of Triangular Matrix Functions, Michigan Mathematical Journal 45 (1), April 1998