Abstract

http://ssrn.com/abstract=241133
 
 

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Inference with an Incomplete Model of English Auctions


Philip A. Haile


Yale University - Department of Economics; National Bureau of Economic Research (NBER)

Elie T. Tamer


Northwestern University - Department of Economics

August 31, 2000

University of Wisconsin, SSRI Working Paper No. 2018

Abstract:     
Standard models of English auctions abstract from actual practice by assuming that bidders continuously affirm their willingness to pay as the price rises exogenously. We show that one need not rely on these models to make useful inferences on the latent demand structure at private value English auctions. Weak implications of rational bidding provide sufficient structure to nonparametrically bound the distribution of bidder valuations and the optimal reserve price, based on observed bids. If auctions and/or bidders differ in observable characteristics, our approach also yields bounds on parameters characterizing the effects of observables on valuations. Whenever observed bids are consistent with the standard model, the identified bounds collapse to the true distribution (or parameters) of interest. Throughout, we propose estimators that consistently estimate the identified features. We conduct a number of Monte Carlo experiments and apply our methods to data from U.S. Forest Service timber auctions in order to assess reserve price policy.

Number of Pages in PDF File: 48

Keywords: English auctions, incomplete models, nonparametric identification and estimation, bounds analysis, timber auctions

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Date posted: October 10, 2000  

Suggested Citation

Haile, Philip A. and Tamer, Elie T., Inference with an Incomplete Model of English Auctions (August 31, 2000). University of Wisconsin, SSRI Working Paper No. 2018. Available at SSRN: http://ssrn.com/abstract=241133 or http://dx.doi.org/10.2139/ssrn.241133

Contact Information

Philip A. Haile (Contact Author)
Yale University - Department of Economics ( email )
28 Hillhouse Ave
New Haven, CT 06520-8264
United States
203-432-3568 (Phone)
203-432-6323 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Elie T. Tamer
Northwestern University - Department of Economics ( email )
2003 Sheridan Road
Evanston, IL 60208
United States
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