As Robert and I discussed last night, Blagojevich's offerings were disappointingly old-school. There was not even an attempt to take advantage of advances in auction technology that are by now well established. Perhaps we were wrong.
Simple game theory shows what was going on. Blagovitch had a choice of strategies before entering a repeat player game. The strategies were Honest or Crooked. The outcomes were Get Caught or Pass Free. The $ outcome was highest for Crooked+Pass Free and probably second highest for Crooked+Get Caught. If it was dollars he wanted to maximise, the strategy choice looks a no brainer.
Once the strategy is chosen, the increase in risk from applying it in each case that arises is small. I.e. (as the indictment shows), seeking bids for the seat did not increase his risk of getting caught; they were on to him anyway. However, the choice of any tactic which could attract publicity would systematically increases the risk of getting caught. Hence, no visible structure in any of the auctions he conducted.
Illinois politics needs the University of Chicago to produce new and advanced theories of covert auctions. We can expect State funds to be allocated for the purpòse.
Does Tyler Cowen get royalties from these posts?
Simple game theory shows what was going on. Blagovitch had a choice of strategies before entering a repeat player game. The strategies were Honest or Crooked. The outcomes were Get Caught or Pass Free. The $ outcome was highest for Crooked+Pass Free and probably second highest for Crooked+Get Caught. If it was dollars he wanted to maximise, the strategy choice looks a no brainer.
Once the strategy is chosen, the increase in risk from applying it in each case that arises is small. I.e. (as the indictment shows), seeking bids for the seat did not increase his risk of getting caught; they were on to him anyway. However, the choice of any tactic which could attract publicity would systematically increases the risk of getting caught. Hence, no visible structure in any of the auctions he conducted.
Illinois politics needs the University of Chicago to produce new and advanced theories of covert auctions. We can expect State funds to be allocated for the purpòse.