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Auctions for Oil and Gas Leases with an Informed Bidder and a Random Reservation Price

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Author Info
Hendricks, Kenneth
Porter, Robert H
Wilson, Charles A

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Abstract

The authors analyze a first-price, sealed bid auction of an object with unknown common value, but one buyer has better information. The reservation price is correlated with the informed buyer's assessment of the value and of the probability of rejection. If all random variables are affiliated, the rate of increase in the distribution of the uninformed bid is never greater than that of the informed bid, the distributions are identical above the support of the reservation price, and the informed buyer is more likely to submit low bids. Bids for offshore oil and gas leases on drainage tracts satisfy these restrictions. Copyright 1994 by The Econometric Society.

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Publisher Info
Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 62 (1994)
Issue (Month): 6 (November)
Pages: 1415-44
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Handle: RePEc:ecm:emetrp:v:62:y:1994:i:6:p:1415-44

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  1. Wilson, William W. & Diersen, Matthew A., 2001. "Competitive Bidding On Import Tenders: The Case Of Minor Oilseeds," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July. [Downloadable!]
  2. Gerard Marty & Raphaele Preget, 2007. "A Socio-economic Analysis of French Public Timber Sales," Working Papers - Cahiers du LEF 2007-03, Laboratoire d'Economie Forestiere, AgroParisTech-INRA. [Downloadable!]
  3. Ravi Jagannathan & Ann E. Sherman, 2006. "Why Do IPO Auctions Fail?," NBER Working Papers 12151, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. CALCAGNO, Riccardo & LOVO, Stefano M., 1998. "Bid-ask price competition with asymmetric information between market makers.," CORE Discussion Papers 1998016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  5. Fernando Branco, 1996. "Common value auctions with independent types," Review of Economic Design, Springer, vol. 2(1), pages 283-309, December. [Downloadable!] (restricted)
  6. Wilson, William W. & Dahl, Bruce L. & Johnson, D. Demcey, 1999. "Transparency And Bidding Competition In International Wheat Trade," Agricultural Economics Reports 23403, North Dakota State University, Department of Agribusiness and Applied Economics. [Downloadable!]
  7. Alan Mehlenbacher, 2007. "Multiagent System Platform for Auction Simulations," Department Discussion Papers 0706, Department of Economics, University of Victoria. [Downloadable!]
  8. Quang Vuong & Sandra Campo & Isabelle Perrigne, 2003. "Asymmetry in first-price auctions with affiliated private values," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(2), pages 179-207. [Downloadable!]
  9. Robert H. Porter, 1992. "The Role of Information in U.S. Offshore Oil and Gas Lease Auctions," Discussion Papers 1008, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    Other versions:
  10. Juan Dubra, 2004. "A Correction to Uniqueness in 'Competitive Bidding and Proprietary Information'," Game Theory and Information 0409005, EconWPA. [Downloadable!]
    Other versions:
  11. Dakshina De Silva & Timothy Dunne & Anuruddha Kankanamge & Georgia Kosmopoulou, 2005. "The Impact of Public Information on Bidding in Highway Procurement Auctions," Microeconomics 0511011, EconWPA. [Downloadable!]
    Other versions:
  12. Gustavo Rodríguez, 1997. "First Price Auctions: Monotonicity and Uniqueness," Economics Working Papers 208, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  13. Wilson, William W. & Diersen, Matthew A., 1999. "Competitive Bidding On Import Tenders: The Case Of Minor Oilseeds," Agricultural Economics Reports 23421, North Dakota State University, Department of Agribusiness and Applied Economics. [Downloadable!]
  14. Kenneth Hendricks & Joris Pinkse & Robert H. Porter, 2001. "Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions," NBER Working Papers 8294, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  15. Roosen, Jutta & Hennessy, David A., 2003. "Testing for the Monotone Likelihood Ratio Assumption," Staff General Research Papers 10193, Iowa State University, Department of Economics.
    Other versions:
  16. Rama Katkar & David Lucking-Reiley, 2001. "Public Versus Secret Reserve Prices in eBay Auctions: Results from a Pokemon Field Experiment," NBER Working Papers 8183, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Rama Katkar & David Lucking-Reiley, 2000. "Public Versus Secret Reserve Prices in eBay Auctions: Results of PokÈmon Field Experiment," Working Papers 0026, Department of Economics, Vanderbilt University. [Downloadable!]
  18. Christopher J. Mayer, 1993. "A model of real estate auctions versus negotiated sales," Working Papers 93-3, Federal Reserve Bank of Boston. [Downloadable!]
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