Preferences and Performance in Simultaneous First-Price Auctions: A Structural Analysis
62 Pages Posted: 27 Oct 2014 Last revised: 24 Apr 2018
Date Written: April 12, 2018
Motivated by the empirical prevalence of simultaneous bidding across a wide range of auction markets, we develop and estimate a structural model of strategic interaction in simultaneous first-price auctions when objects are heterogeneous and bidders have preferences over combinations. We establish non-parametric identification of primi- tives in this model under standard exclusion restrictions, providing a basis for both estimation and testing of preferences over combinations. We then apply our model to data on Michigan Department of Transportation (MDOT) highway procurement auc- tions, quantifying the magnitude of cost synergies and evaluating the performance of the simultaneous first-price mechanism in the MDOT marketplace.
Keywords: Auctions, multi-object auctions, simultaneous auctions, identification, structural estimation
JEL Classification: D44, D61, C51
Suggested Citation: Suggested Citation