Testing Affiliation in Private-values Models of First-price Auctions Using Grid Distributions
Within the private-values paradigm, we construct a tractable empirical model of equilibrium behaviour at first-price auctions when bidders' valuations are potentially dependent, but not necessarily affiliated. We develop a test of affiliation and apply our framework to data from low-price, sealed-bid auctions held by the Department of Transportation in the State ofMichigan to procure road-resurfacing services: we do not reject the hypothesis of affiliation in cost signals.
|Date of creation:||Dec 2009|
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