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Purpose This paper aims to examine potential causes of bankruptcy as they relate to hurricane damage. Investigate whether hurricanes result in personal bankruptcy filings due to real property damages. Strengthen existing descriptive results by using fully modified ordinary least squares (FMOLS). Design/methodology/approach Lagged FMOLS model is used with data from states that suffered hurricane damage between 2000 through 2020. FMOLS controls for various financial distresses that can cause bankruptcy filings. Findings Bankruptcy is usually filed for within one year of a hurricane. Changes in house prices and hurricane severity were significant indicators of bankruptcy filings. However, the divorce rate, commonly thought of as a primary reason for bankruptcy, is insignificant. Research limitations/implications Data was available on a state level for the independent variables. Hurricane damage needed to be financially significant enough for inland flooding to be measurable and influential. Practical implications Establishes that financial distress comes from several sources, not just home damage. Financial distress is highly correlated with whether a home was insured. Divorce does not cause bankruptcy filings. Social implications Federal flood insurance programs should be reexamined. Having a broader all-risk homeowner policy could reduce the number of households that file for bankruptcy after a hurricane. Originality/value Existing research uses descriptive statistics and obtains mixed findings regarding the association between hurricane damage and bankruptcy filings. The FMOLS approach provides clarity about this association.

Purpose This study aims to examine the linkage between bankruptcy filings and hurricane events. Several independent variables related to local district court bankruptcy filings are examined. The primary question posed is whether Category 3,4 and 5 hurricanes result in personal bankruptcy filings due to the real property and other damage that ensures. Design/methodology/approach Landfall hurricanes in Florida from 2001 through 2018 were examined by using the fully modified least square regression model. Descriptive statistics include elasticity measures that show statistics prior and post the passage of the Bankruptcy Abuse and Prevent and Consumer Protection Act of 2005 (BAPCPA). Findings The elasticity of housing prices was a useful statistic in explaining bankruptcy filings. Regression results indicate that bankruptcy filing occur within one year of a serious hurricane. The regression model found hurricane events and housing price trends were significant variable when predicting district court bankruptcy filings. Practical implications BAPCPA targets fraud under Chapter 7 bankruptcy filings. Unfortunately, this also had the unintended consequence of discouraging legitimated filings due to the lowering of the marginal benefit associated with filing when the “means test” is applied. Social implications Lack of flood insurance coverage and stagnant real estate prices could limit the desirability of filing under Chapter 13 resulting in an inventory of damaged properties being foreclosed. Originality/value Prior researchers relied on a descriptive approach by using percentage rates to quantify the association between hurricane damage and bankruptcy filings. By using the fully modified regression-based approach, the study herein establishes that filings occur approximately a year after the household experiences the real property loss and identifies other casual factors that influence the decision to file.

This paper examines situations in which a seller might make a second chance (take-it-or-leave-it) offer to a non-winning bidder at a price equal to their bid at auction. This study is motivated by the take-it-or-leave-it second chance offer rules used by eBay and a number of state procurement agencies. Equilibrium bidder behavior is determined for IPV sealed bid first price, second price, English, and Vickrey auctions when a second chance offer will be made with an exogenous probability p. In all but the Vickrey auction (which elicits the dominant strategy of bidding one's value) equilibrium bids are lower than if there were no possibility of a second chance offer and higher than if a second chance offer will be made for certain. Further, the possibility of a second chance offer erodes the strategic equivalence between second price bids and English auction drop out levels. If bidders are risk averse (with CRRA preferences), this difference leads to expected revenue dominance of the second price over the English auction, both of which dominate the Vickrey auction. The first price auction is also shown to revenue dominate the Vickrey auction, and moreover, numerical results and intuition from existing literature suggest that the first price auction revenue dominates the second price auction.

An auction with a buyout option is modelled. Such an option allows a bidder to purchase the item being auctioned at a pre-specified buyout price, instead of attempting to obtain the item through the traditional auction procedure. This analysis is motivated by internet auctions where such options are present. If all auction participants are risk neutral, the seller will choose a buyout price high enough so that the option is never exercised. However, a risk averse seller facing risk neutral bidders will choose a price low enough so that the option is exercised with positive probability. Further, if bidders are risk neutral and the seller is risk averse, this option may result in a Pareto improvement compared to a sealed bid second price auction.

Recent measures to reduce Medicare spending include the use of competitive bidding in determining reimbursement prices. Several competitive bidding experiments have been conducted by the Centers for Medicare and Medicaid Services (CMS) to determine reimbursement prices. This paper investigates the use of competitive bidding to set reimbursement prices for durable medical equipment, prosthetics, orthotics, and supplies. First, the competitive bidding process is examined on a theoretical level. It is shown that the CMS competitive bidding process (auction) is inefficient, leads to price increases, and may cause decreases in the quality of services. Next, data supporting the theoretical predictions are presented. Finally, we suggest that a descending variant of the Ausubel, Cramton, and Milgrom (2006) clock-proxy auction be used.

This dissertation contains both a theoretical and empirical analysis of the sale of two objects to multiple bidders where each bidder has a positive valuation for both objects. A variety of selling mechanisms are considered, including discriminatory, uniform price, and sequential auctions. Working within the independent private values paradigm, a downward sloping demand property is imposed on individual bidder valuations by specifying that a bidder's valuation for a first object is no less than his valuation for an additional object. The first two chapters consider games of complete and incomplete information respectively. In both, bidder behavior is derived for each type of auction. Assuming that bidders are following equilibrium strategies, the auctions are ranked in terms of their revenue generating properties. Next, the efficiency of each auction is examined. The character of equilibrium behavior for these multi-unit auctions differs substantially from that in the single object case. Results are obtained, for a certain class of distributions, which show that there is a large amount of shading in low bids in the uniform price auction. It is shown that this shading results in revenue dominance of the discriminatory auction over the uniform price auction. This result is in sharp contrast to that found in Milgrom and Weber's seminal work on auctions. Further, the uniform price auction is the only auction which does not become efficient as the number of bidders grows large. These two results suggest problems with the use of uniform price auctions by the United States Treasury. The final chapter in the dissertation uses the equilibrium behavior derived in the incomplete information game for a sequence of second price auctions. This behavior displays a higher level of shading of first round bids than there would be if there were no subsequent round. Using data from tobacco auctions, the multi-unit demand model is compared to that commonly used in empirical studies of auctions, the unit-supply model. Using maximum likelihood estimation and Vuong's 1989 test for non-nested models, the unit-supply model is rejected in favor of the multi-unit demand model introduced in this dissertation.

Working Paper No. 8844 A major factor contributing to smoking initiation and experimentation by teenagers is the ability to 'bum' cigarettes. Yet research until now has ignored the impact of a lending/borrowing market on the smoking decisions of teenagers. In this paper, we develop a theoretical model where smoking decisions are determined by an individual's utility maximization process that includes an incentive to lend cigarettes. Predictions from this model are tested using data from the Youth Risk Behavior Surveys that can distinguish between teens who primarily buy and those who primarily bum their cigarettes. We show the ways in which price and restrictions on smoking will impact the decision to buy or bum cigarettes, as well as the impact on the allocation of purchased cigarettes between those self-consumed and those lent to others. Key results indicate that as prices and restrictions increase, teenagers are less likely to be regular smokers who purchase cigarettes and are more likely to consume smaller quantities obtained via the lending market. The basic conclusions are that anti-smoking policies have significant effects on the quantity of cigarettes consumed by teens and that these policies can help reduce the number of teens that escalate from experimental to regular smoking.

Working Paper No. 7425 The effects on ex ante optima of a lag in seeing monetary realizations are studied using a matching model of money. The main new ingredient in the model is meetings in which producers have more information than consumers. A consequence is that increases in the amount of money that occur with small enough probability can have negative impact effects on output, because it is optimal to shut down trade in such low probability meetings rather than have lower output when high probability realizations occur. The information lag also produces prices that do not respond much to current monetary realizations.

The effects on ex ante optima of a lag in seeing monetary realizations are studied using a matching model of money. The main new ingredient in the model is meetings in which producers have more information than consumers. A consequence is that increases in the amount of money that occur with small enough probability can have negative impact effects on output, because it is optimal to shut down trade in such low probability meetings rather than have lower output when high probability realizations occur. The information lag also produces prices that do not respond much to current monetary realizations.