Some Evidence of the Winner's Curse
The mathematical complexity of auction theory has restricted empirical work to qualitative tests of its basic predictions, with mixed results. This paper exploits the theory of order statistics to derive a Nash bid function that is linear in its parameters , allowing direct estimati on by linear least squares. The bid function is fitted to a cross section of auctions for highway construction contracts from thirty-three states, and provides support for several hypotheses of the theory of common-value auctions. Copyright 1988 by American Economic Association.
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Volume (Year): 78 (1988)
Issue (Month): 5 (December)
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