IDEAS home Printed from https://ideas.repec.org/p/duk/dukeec/10-80.html
   My bibliography  Save this paper

Unobserved Heterogeneity and Reserve Prices in Auctions

Author

Listed:
  • James W. Roberts

Abstract

This study addresses the need to account for unobserved heterogeneity in auctions to improve our estimates of the distribution of bidder values. The method uses reserve prices to allow the distribution of bidders' private information to depend on the realization of the unobserved heterogeneity. The identifying assumption is that reserve prices are monotonic in the realization of unobserved heterogeneity and sellers are not required to set reserve prices optimally. The model can be estimated using only transaction prices. The paper proposes an estimation method and derives the asymptotic distribution of the proposed estimator. Working with data on used car auctions, the paper shows that controlling for unobserved heterogeneity a ects estimates of the distribution of bidder values and impacts predicted outcomes dramatically.

Suggested Citation

  • James W. Roberts, 2009. "Unobserved Heterogeneity and Reserve Prices in Auctions," Working Papers 10-80, Duke University, Department of Economics.
  • Handle: RePEc:duk:dukeec:10-80
    as

    Download full text from publisher

    File URL: http://papers.ssrn.com/abstract=1695647
    File Function: main text
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hu, Yingyao & McAdams, David & Shum, Matthew, 2013. "Identification of first-price auctions with non-separable unobserved heterogeneity," Journal of Econometrics, Elsevier, vol. 174(2), pages 186-193.
    2. Donna, Javier & Espin-Sanchez, Jose, 2014. "Complements and Substitutes in Sequential Auctions: The Case of Water Auctions," MPRA Paper 55079, University Library of Munich, Germany.
    3. Yingyao Hu & David McAdams & Matthew Shum, 2009. "Nonparametric Identification of Auction Models with Non-Separable Unobserved Heterogeneity," Economics Working Paper Archive 553, The Johns Hopkins University,Department of Economics.
    4. Kim, Dong-Hyuk, 2013. "Optimal choice of a reserve price under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 587-602.

    More about this item

    Keywords

    Auctions; Unobserved Heterogeneity;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:duk:dukeec:10-80. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics Webmaster). General contact details of provider: http://econ.duke.edu/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.