This paper introduces optimal competition: the best form of competition in an industry that a competition authority can achieve under the information constraint that it cannot observe firms' effciency levels.We show that the optimal competition outcome in an industry becomes more competitive as...

This paper presents a model for the "gambling effect," i.e., the effect that risky gambles are evaluated differently than riskless outcomes due to an intrinsic utility (or disutility) of gambling.The model turns out to violate stochastic dominance and therefore its primary applications will be...

This paper considers the sealed bid and ascending auction, which both identifies the minimum Walrasian equilibrium prices and where truthful preference revelation constitutes an equilibrium. Even though these auction formats share many theortical properties, there are behavioral aspects that are...