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What Model for Entry in First-Price Auctions? A Nonparametric Approach

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  • Marmer, Vadim
  • Shneyerov, Artyom
  • Xu, Pai

Abstract

We develop a nonparametric approach that allows for discrimination among alternative models of entry in first-price auctions. Three models of entry are considered: those of Levin and Smith (1994), Samuelson (1985), and a new model in which the information received at the entry stage is imperfectly correlated with bidder valuations. We derive testable restrictions of these models based on how the pro-competitive selection effect shifts bidder valuation quantiles in response to an increase in the number of potential bidders.

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Bibliographic Info

Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number marmer-07-11-22-02-26-44.

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Length: 56 pages
Date of creation: 22 Nov 2007
Date of revision: 18 Feb 2011
Handle: RePEc:ubc:pmicro:marmer-07-11-22-02-26-44

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Web page: http://www.economics.ubc.ca/

Related research

Keywords: First-price auctions; models of entry; selective entry; selection effect; nonparametric estimation; quantiles;

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References

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  1. Samuelson, William F., 1985. "Competitive bidding with entry costs," Economics Letters, Elsevier, vol. 17(1-2), pages 53-57.
  2. Kenneth Hendricks & Joris Pinkse & Robert H. Porter, 2003. "Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 115-145.
  3. Decio Coviello & Mario Mariniello, 2010. "The Role of Publicity Requirements on Entry and Auctions Outcomes," CEIS Research Paper 180, Tor Vergata University, CEIS, revised 21 Dec 2010.
  4. Avery, Christopher, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 185-210, April.
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  7. Emmanuel Guerre & Isabelle Perrigne & Quang Vuong, 2009. "Nonparametric Identification of Risk Aversion in First-Price Auctions Under Exclusion Restrictions," Econometrica, Econometric Society, vol. 77(4), pages 1193-1227, 07.
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  10. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521586115, April.
  11. Gourieroux,Christian & Monfort,Alain, 1995. "Statistics and Econometric Models," Cambridge Books, Cambridge University Press, number 9780521405515, April.
  12. Marmer, Vadim & Shneyerov, Art & Xu, Pai, 2010. "Supplement to "What Model for Entry in First-Price Auctions? A Nonparametric Approach"," Microeconomics.ca working papers vadim_marmer-2010-22, Vancouver School of Economics, revised 18 Feb 2011.
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Citations

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Cited by:
  1. Vivek Bhattacharya & James W. Roberts & Andrew Sweeting, 2013. "Regulating Bidder Participation in Auctions," NBER Working Papers 19352, National Bureau of Economic Research, Inc.
  2. Florencia M. Gabrielli, 2013. "Detecting Collusion on Highway Procurement," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 59, pages 127-165, January-D.
  3. De Silva, Dakshina G. & Kosmopoulou, Georgia & Pagel, Beatrice & Peeters, Ronald, 2010. "The impact of timing on bidding behavior in procurement auctions of contracts with private costs," MPRA Paper 27355, University Library of Munich, Germany.
  4. Hanming Fang & Xun Tang, 2013. "Inference of Bidders’ Risk Attitudes in Ascending Auctions with Endogenous Entry," PIER Working Paper Archive 13-056, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  5. Marmer, Vadim & Shneyerov, Art & Xu, Pai, 2010. "Supplement to "What Model for Entry in First-Price Auctions? A Nonparametric Approach"," Microeconomics.ca working papers vadim_marmer-2010-22, Vancouver School of Economics, revised 18 Feb 2011.
  6. Elena Krasnokutskaya & Katja Seim, 2011. "Bid Preference Programs and Participation in Highway Procurement Auctions," American Economic Review, American Economic Association, vol. 101(6), pages 2653-86, October.
  7. Nianqing Liu & Quang Vuong & Haiqing Xu, 2012. "Rationalization and Identification of Discrete Games with Correlated Types," Department of Economics Working Papers 130915, The University of Texas at Austin, Department of Economics.
  8. Hanming Fang & Xun Tang, 2011. "Inference of Bidders’ Risk Attitudes in Ascending Auctions with Endogenous Entry, Second Version," PIER Working Paper Archive 12-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 17 Apr 2012.
  9. Hanming Fang & Xun Tang, 2013. "Inference of Bidders’ Risk Attitudes in Ascending Auctions with Endogenous Entry," NBER Working Papers 19435, National Bureau of Economic Research, Inc.
  10. Damian Damianov, 2012. "Seller competition by mechanism design," Economic Theory, Springer, vol. 51(1), pages 105-137, September.
  11. Sokbae 'Simon' Lee & Kyungchul Song & Yoon-Jae Whang, 2014. "Testing for a general class of functional inequalities," CeMMAP working papers CWP09/14, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  12. Coviello, Decio & Mariniello, Mario, 2014. "Publicity requirements in public procurement: Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 109(C), pages 76-100.
  13. Matthew Gentry & Tong Li, 2012. "Identifcation in auctions with selective entry," CeMMAP working papers CWP38/12, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  14. James W. Roberts & Andrew Sweeting, 2011. "When Should Sellers Use Auctions?," NBER Working Papers 17624, National Bureau of Economic Research, Inc.

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