A government officials' propensity to corruption, or corruptibility, can be affected by his intertemporal preference over job benefits. Through a dynamic model of rent-seeking behavior, this paper examines how endogenously determined corruptibility changes with monitoring intensity, salary...

This paper characterizes the optimal first-price auction (FPA) and second-price auction (SPA) for selling rights, contracts, or licenses that involve ensuing payoff uncertainty for the winning bidder. The distribution of the random payoff is common knowledge, except that bidders have private...

A common assumption in the analysis of symmetric auctions is that the bidders' value estimates exhibit positive informational externalities (PIE). This assumption implies upward drifting price sequences at sequential auctions, which is challenged by an empirical regularity, known as the...

We analyze sequential Dutch and Vickrey auctions where risk averse, or risk preferring, bidders may have heterogeneous risk exposures. We derive and characterize a pure strategy equilibrium of both auctions for arbitrary number of identical objects. A sufficient, and to certain extent necessary,...

We investigate the possibility of enhancing efficiency by awarding premiums to a set of highest bidders in an English auction - in a setting that extends Maskin and Riley (1984, Econometrica 52: 1473-1518) in three aspects: (i) the seller can be risk averse, (ii) the bidders can have...

In this paper, a new paradigm is developed for analyzinginvestment strategies and pricing financial assets. This paradigmassumes that any investment strategy has its own "inherent reward" and "inherent risk" that can be judged with common sense. Ijustify axiomatically the existence and...

This paper applies the dichotomous theory of choice by Zou (2000a) tothe analysis of investmentstrategies and security markets. Issues concerning individualoptimality, (approximate) arbitrage,capital market equilibrium, and Pareto efficiency are studied undervarious market conditions. Among the...

We show in general that risky investments become more attractive asthe investment horizon (n) lengthens.Specifically, any investor's maximal expected utility directlyincreases with n, as well as the investor's willingness toallocate more capital to the risky assets if his optimal strategy...