General Economics (econ.GN)

Abstract: This paper examines how risk and budget limits on investment mandates affect the bidding strategy in a uniform-price auction for issuing corporate bonds. I prove the existence of symmetric Bayesian Nash equilibrium and explore how the risk limits imposed on the mandate may mitigate severe underpricing, as the symmetric equilibrium's yield positively relates to the risk limit. Investment mandates with low-risk acceptance inversely affect the equilibrium bid. The equilibrium bid provides insights into the optimal mechanism for pricing corporate bonds conveying information about the bond's valuation, market power, and the number of bidders. These findings contribute to auction theory and have implications for empirical research in the corporate bond market.

Abstract: We evaluate the tendency for different voting methods to promote political compromise and reduce tensions in a society by using computer simulations to determine which voters candidates are incentivized to appeal to. We find that Instant Runoff Voting incentivizes candidates to appeal to a wider range of voters than single-winner Plurality Voting, but that it still leaves candidates far more strongly incentivized to appeal to their base than to voters in opposing factions. In contrast, we find that other voting methods, including STAR (Score Then Automatic Runoff) Voting and Condorcet methods, incentivize candidates to appeal to currently-opposed voters as much to their base, and that these differences between voting methods become more pronounced the more candidates are in the race.