Empirical Tests of Information Aggregation

20 Pages Posted: 19 Jul 2005 Last revised: 27 Jun 2008

See all articles by Pai-Ling Yin

Pai-Ling Yin

Marshall School of Business, University of Southern California

Date Written: September 1, 2006

Abstract

This paper proposes tests to empirically examine whether auction prices aggregate information away from the limit. These tests are applied to a unique dataset containing winning bids and measures of the value and dispersion of information signals in eBay auctions for computers. Results suggest that prices partially aggregate information, but do not converge to the common value. Even away from the limit, more bidders and stronger information have a significant effect on the convergence of prices and information aggregation. Even partial information aggregation may represent a potential efficiency gain over one-to-one trade of used goods with uncertain common values.

Keywords: eBay, auctions, information

JEL Classification: D44, D8, L81

Suggested Citation

Yin, Pai-Ling, Empirical Tests of Information Aggregation (September 1, 2006). International Journal of Industrial Organization, Vol. 25, No. 6, 2007. Available at SSRN: https://ssrn.com/abstract=760369 or http://dx.doi.org/10.2139/ssrn.760369

Pai-Ling Yin (Contact Author)

Marshall School of Business, University of Southern California ( email )

United States

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