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The Econometrics Of English Auctions

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  • Matthew Shum

Abstract

We characterize Bayesian Nash equilibria for asymmetric ascending auctions in which both common and private value components are accommodated, and bidders' valuations and signals are drawn from asymmetric distributions. It is shown that the equilibrium inverse bid functions in each round of the auction can be solved from a system of equations formed from bidders' expectations of the value of the object conditional on all information available during that round. The computational tractability of this characterization allows us to analytically solve for the equilibrium bidding strategies in a log-normal model. This forms the basis of an econometric model which we estimate using data from the PCS spectrum auctions run by the U.S. Federal Communications Commission.

Suggested Citation

  • Matthew Shum, 1998. "The Econometrics Of English Auctions," Working Papers mshum-98-02, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:mshum-98-02
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    References listed on IDEAS

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    1. Laffont, Jean-Jacques & Ossard, Herve & Vuong, Quang, 1995. "Econometrics of First-Price Auctions," Econometrica, Econometric Society, vol. 63(4), pages 953-980, July.
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    8. Porter, Robert H, 1995. "The Role of Information in U.S. Offshore Oil and Gas Lease Auctions," Econometrica, Econometric Society, vol. 63(1), pages 1-27, January.
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    Cited by:

    1. A Banerji & J.V. Meenakshi, 2010. "Competition and Collusion in Grain Markets: Basmati Auctions in North India," Working Papers id:2701, eSocialSciences.
    2. Matthew Shum, 1998. "Structural Estimation Of Auction Models," Working Papers mshum-98-01, University of Toronto, Department of Economics.

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    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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