This paper discusses some economic aspects of the recent German and Austrian UMTS license auctions. We consider a stylized model of the open ascending auction with incomplete information and market externalities. It is shown that, if the dominant incumbent is not successful in pushing the...

We prove that any strictly competitive perfect-information two-person game with n outcomes is solvable in n-1 steps of elimination of weakly dominated strategies - regardless of the length of the game tree. The derivation is based on the fact that if player i does not possess a winning strategy,...

We briefly survey several insights about value and revenue maximization in multi-object auctions and apply them to the German (and Austrian) UMTS auction. In particular, we discuss in detail the exposure probelm that caused firms in Germany to pay almost Euro 20 billion for nothing.

The paper scrutinizes various stylized facts related to the minmax theorem for chess. We first point out that, in contrast to the prevalent understanding, chess is actually an infinite game, so that backward induction does not apply in the strict sense. Second, we recall the original argument...

Recent empirical studies indicate that financial institutions tend to overestimate their market risks in disclosures to supervisory authorities. The evidence is surprising because overstated risk figures imply a costly restriction to the bank's trading activity. This paper offers a stylized...

We consider the hypothesis that each player i of an N-person game assigns positive probability to a strategy profile if and only if it is provable that it is possibly chosen by her opponents. When this hypothesis is commonly assumed among the players, then a given strategy is provably possible...

In competitive procurement auctions, bids often have the form of unit-price contracts (UPCs). We show that optimal bidding behavior in UPC auctions is typically non-monotonic, and therefore may lead to inefficient allocations. However, UPC auctions may still be desirable for the buyer when...

The paper explores the consequences of assuming that players involved in a complex perfect-information game perceive the situation as one of incomplete information, in the sense that, at any given decision node, players are certain about the structure of the game tree only within a limited...

Value-based planning (value management) is a management concept that implies evaluating all future plans and strategic decisions of a firm along the objective of maximizing share-holder value. While the underlying theoretical concepts are comparatively simple, the actual implementation of value...

The paper argues that unawareness is strategically inequivalent to uncertainty. Specifically, when players update their priors during the game, then posteriors may differ between settings involving unawareness and those involving mere uncertainty. The argument is developed along the classic...