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Inference with an Incomplete Model of English Auctions

University of Wisconsin, SSRI Working Paper No. 2018

48 Pages Posted: 10 Oct 2000  

Philip A. Haile

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

Elie T. Tamer

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2000

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.

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

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: https://ssrn.com/abstract=241133 or http://dx.doi.org/10.2139/ssrn.241133

Philip A. Haile (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8264
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203-432-3568 (Phone)
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National Bureau of Economic Research (NBER)

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Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
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Elie T. Tamer

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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