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We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)” admit different types of low-price equilibria, which are eliminated by a “hybrid allocation rule (HYBRID).” We use a controlled laboratory experiment to compare the empirical performances of these allocation rules.

We conduct three-bidder uniform price divisible-good auctions varying the different allocation rules (standard, uniform, or hybrid) and whether or not explicit communication between bidders is allowed. For the case where explicit communication is allowed we also study six-bidder auctions.

We find that prices are similar across allocation rules. Under all three allocation rules, prices are competitive when bidders cannot explicitly communicate. With explicit communication, prices are collusive, and we observe collusive prices even when collusive agreements are broken. Collusive agreements are particularly fragile when the gain from a unilateral deviation is larger, and an implication of this is that collusive agreements are more robust under STANDARD.

We do not find conclusive evidence of differences in performance among allocation rules. However, there is suggestive evidence that STANDARD may be more vulnerable to collusion.

Divisible-good uniform price auctions are used in financial markets, but it is not possible to use naturally occurring data to test how alternatives to the standard format would perform. Using laboratory methods we provide an initial test of alternative allocation rules.

This study aims to present how a historical governance mechanism (a statutory rule of profit allocation) could answer the practical question of profit allocation, thereby proposing a methodology to enhance future quantitative studies.

The rule sets profit allocations to a predetermined set of stakeholders in corporate charters. It could be seen as a tool used by historical organisations to enact corporate social responsibility (CSR). The authors propose a straightforward way to calculate the payout ratios promised by this rule to each stakeholder. This methodology was applied to shareholders and used to calculate the promised dividend payout ratios.

This rule constitutes a natural experiment from which modern organisations could learn to implement the most relevant profit-allocation schemes given their CSR strategy. The authors propose calculating a promised payout ratio that would allow scholars to empirically examine the rule and its effects and provide accurate recommendations to these organisations.

This mechanism allows the study of profit allocations made to stakeholders (not limited to shareholders or employees like it is usually done). The promised payout ratio makes future quantitative investigations possible.

Modern organisations could use the CSR mechanism to allocate profits continuously in formats that would best fit their strategy and environment.

To the best of the author’s knowledge, this is the first article to examine the statutory rule of profit allocation per se, which proposes a new methodology to calculate payout ratios promised by the rule. The idea is to investigate their impact and provide recommendations for modern organisations to adapt.

Prior research suggests that cultural values affect individuals’ preferences in whether work rewards (i.e. pay and benefits) are allocated according to rules based on equity, equality, or need. However, this research has focussed primarily on societal-level values or individual-level operationalizations of values originally conceptualized at the societal level. Drawing on equity and social exchange theories, the purpose of this paper is to present a theoretical model and nine propositions that incorporate both individual and societal values as determinants of these reward allocation rule preferences.

The author briefly reviews of the relevant literature on values and reward allocation preferences and present arguments supported by prior research, leading to a model and nine propositions.

The author proposes that societal values and individual values have main and interactive effects on reward allocation preferences and that the effects of societal values are partially mediated by individual values.

The model and propositions present relationships that could be tested in future multi-level studies. Future conceptual/theoretical work may also build on the model presented in this paper.

The proposed relationships, if supported, would have important implications for organizational reward systems and staffing.

Prior research on reward allocation preferences focusses mostly on the effects of societal or individual values. This theoretical paper attempts to clarify and distinguish values at these two levels and to better understand their main and interactive effects on individual reward allocation rule preferences.

The purpose of the paper is to describe the recent amendments to FINRA's IPO Allocation Rule that were approved by the US Securities and Exchange Commission.

The paper provides a description of the IPO Allocation Rule and its operation, followed by a description of the IPO Allocation Rule amendments recently amended.

On November 27, 2013, the Securities and Exchange Commission approved a change to FINRA's IPO allocation rule 5131 (the “amendment”). The amendment allows a fund of funds or other collective investment account that is investing in an IPO to rely on a written representation from an unaffiliated private fund investor that does not look through to its beneficial owners, provided that such unaffiliated private fund is managed by an investment adviser, has assets greater than $50 million, and meets certain other indicia of independence that are described.

The paper provides practical guidance from experienced regulatory lawyers regarding an amendment to an important rule governing IPO sales and allocation practices.

Tooling is a common component of an industrial product’s manufacture. Specific tooling is devised to serve the fabrication of a particular product, while generic tooling can be used in the manufacture of multiple products. In the latter case, companies are confronted with the problem of fairly allocating the indirect costs of the tooling. This article studies how to allocate costs of generic tooling to single production orders.

Ten allocation methods (AMs) are described that are in principle suited to the distribution of generic tooling costs to production orders. Since the presented methods have for the most part been discussed in differing contexts, we apply them to a specified generic tooling problem for comparison. Evaluation of the various methods is based on 16 criteria. Reasoning is supported by a computational Monte Carlo simulation. Furthermore, we suggest using the Analytical Hierarchy Process (AHP) to elaborate one final proposition concerning the most preferable allocation scheme.

The article reports the single allocation rules’ performances for different allocation scenarios. The described characteristics refer to fairness, efficiency, and simplicity as well as to empty-core performance. Using AHP analysis allows for the aggregation of the rules’ criteria ratings. Thus, especially suitable allocation schemes for the problem at hand are identified.

An allocation is required for budgeting reasons and also for the definition of projects’ bottom-up sales prices. Selecting the “right” AM is important, as a suboptimal AM can result in unfair allocation vectors, which will act as incentives to stop using the common resource, potentially leading to higher total costs.

Research on the comparison of AMs is typically performed for certain purposes, such as enterprise networks, horizontal cooperative purchasing scenarios, or municipal service units. This article will augment the research evaluating AMs by introducing a novel set of evaluation criteria and by providing an in-depth comparison of AMs suited for the allocation of generic tooling costs.

This review article focuses on the factors that affect the selection and implementation of three principles of distributive justice (i.e., equity, equality, and need) to reward systems in group and organizational settings. After presenting an overview of the assumptions, goals, and possible consequences associated with each of the three perspectives, the article then describes the moderating factors influencing distribution rule preferences across four levels of analysis: (1) the interorganizational, (2) the intraorganizational, (3) the work group, and (4) the individual. Some of the variables discussed include cross‐cultural differences, reward system implementation, task interdependency, work group climate, and individual characteristics. This material is then summarized through the use of a new conceptual model for describing allocation rule preferences. The article concludes with suggestions for future research.

The purpose of this paper is to analyse how the regional effects of expansion can be managed under the constraints of voluntary cooperation. This paper studies international cooperation on electricity transmission expansions in a region of countries that shares a joint electricity infrastructure.

Cooperative game theory and the partition-function form were applied in combination with benefit–cost ratios to model and analyse the incentives to cooperate under different cost allocation rules. Empirical background was provided by a case study of a transmission investment agreement made on the Nordic electricity market.

Both cost sharing and the composition of expansion plans were identified as ways of reaching regional agreements. It was found that agreements based on proportional division of costs in relation to benefits were the best choice for voluntary cooperation.

The study did not analyse the effects or relevance of surplus sharing in addition to that implied by cost sharing, nor has it studied the regulatory and legal requirements for implementing side-payments between countries in grid expansions. These issues could benefit from more study.

The results are relevant for the development of international cooperation on grid expansions and as an input to regulations and policies aimed at promoting regional perspectives, in particular for the case of a single internal energy market in Europe.

The paper contributes with an analysis of incentives for transmission expansions in a multinational environment subject to voluntary provision and a lack of supranational authorities with decision power.

The purpose of this paper is to describe the Financial Industry Regulatory Authority's new rule for IPO allocation and the requirements for compliance with the rule.

The paper provides an overview of the new FINRA Rule 5131, containing, among other things, provisions that prohibit the “spinning” of IPO shares to certain present and prospective investment banking clients. Specifically, the paper outlines the new regulations on “quid pro quo” allocations, “spinning”, “flipping” and IPO pricing and trading practices. The paper also provides detailed guidance to broker‐dealers regarding their obligations under the rule.

The proposed new rule is intended to prevent the following types of conduct: the allocation of IPO shares as consideration or inducement for the payment of excessive compensation for other services provided by the member; the acceptance of market orders of IPO shares prior to the development of a secondary market; the allocation of IPO shares to an executive officer or director of a company on the condition that the officer or director send the company's investment banking business to the member, or as consideration for investment banking services previously rendered; and the imposition of a penalty on registered representatives whose retail customers have “flipped” IPO shares when similar penalties have not been imposed with respect to syndicate members.

The paper provides practical guidance from experienced regulatory lawyers regarding an important proposed change.

In this paper, we review the literature on pay variation (e.g., pay dispersion, pay compression, pay range) in organizations. Pay variation research has increased markedly in the past two decades and much progress has been made in terms of understanding its consequences for individual, team, and organizational outcomes. Our review of this research exposes several levels-related assumptions that have limited theoretical and empirical progress. We isolate the issues that deserve attention, develop an illustrative multilevel model, and offer a number of testable propositions to guide future research on pay structures.

Purpose – This study constitutes a first attempt to experimentally test the performance of a 100% auction versus a 100% free allocation of CO2 permits under the rules and parameters that mimic the EU ETS (imperfect competition, uncertainty in emissions' control, and allowing banking), with environmental targets more restrictive than the current ones but foreseeable for the near future.

Methodology/approach – Two experimental treatments were run to achieve our goal. Both included the rules and the parameters that parallel the EU ETS structure, the only difference being the rule for the primary allocation of permits.

Findings – Our experimental results indicate that the EU ETS has the potential to reduce CO2 emissions, achieving targets considerably more restrictive than the current ones at high efficiency levels, both with auctioned and free emission permits.

Practical implications – Concerns about undue scarcity, and corresponding high prices, in secondary markets generated by a primary auction market are not warranted under the proposed dynamic auction format. This adds arguments favoring auctioning over grandfathering as the rule for the initial allocation of emission permits in the EU ETS.

Originality/value of chapter – This study implements a theoretically appropriate auction format for the primary allocation of emission permits (the Ausubel (2004) auction) and incorporates a first attempt to include in the analysis measures of the risk preferences of subjects participating in emission permits experiments. These characteristics are for the first time implemented under a complex experimental design (including uncertainty of emission abatement, and banking), trying to parallel the EU ETS trading environment.