Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions / Kenneth Hendricks, Joris Pinkse, Robert H. Porter.

Format:

Book

Author/Creator:

Hendricks, Kenneth.

Contributor:

National Bureau of Economic Research.

Pinkse, Joris.

Porter, Robert H.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8294.

NBER working paper series no. w8294

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

This paper studies federal auctions for wildcat leases on the Outer Continental Shelf from 1954 to 1970. These are leases where bidders privately acquire (at some cost) noisy, but equally informative, signals about the amount of oil and gas that may be present. We develop a test of equilibrium bidding in a common values model that is implemented using data on bids and ex post values. We compute bid markups and rents under the alternative hypotheses of private and common values and find that the data are more consistent with the latter hypothesis. Finally, we use data on tract location and ex post values to test the comparative static prediction in common value auctions that bidders may bid less aggressively when they expect more competition.

Notes:

Print version record

May 2001.