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Testing Affiliation in Private-values Models of First-price Auctions Using Grid Distributions

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  • Castro, Luciano I. De
  • Paarsch, Harry J.

Abstract

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.

Suggested Citation

  • Castro, Luciano I. De & Paarsch, Harry J., 2009. "Testing Affiliation in Private-values Models of First-price Auctions Using Grid Distributions," CEI Working Paper Series 2009-11, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hitcei:2009-11
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/29230/1/wp2009-11.pdf
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    Cited by:

    1. Luciano De Castro, 2012. "Correlation of Types in Bayesian Games," Discussion Papers 1556, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Luciano De Castro, 2010. "Affiliation, Equilibrium Existence and Revenue Ranking of Auctions," Discussion Papers 1530, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Luciano I. de Castro, 2009. "Affiliation and Dependence in Economic Models," Discussion Papers 1479, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

    More about this item

    Keywords

    first-price; sealed-bid auctions; affiliation; MTP2;

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