Luciano I de Castro

Luciano I de Castro

Within the private-values paradigm, we construct a tractable empirical model of equilibrium behavior 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 of Michigan to procure road-resurfacing services: we do not reject the hypothesis of affiliation in cost signals.



Abstract:

Within the private-values paradigm, we construct a tractable empirical model of equilibrium behavior 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 of Michigan to procure road-resurfacing services: we do not reject the hypothesis of affiliation in cost signals.

Key words and phrases:

First-price, sealed-bid auctions, affiliation, MTP2.

Citation:

de Castro, L. and Paarsch, H. (2010): “Testing Affiliation in Private-Values Models of First-Price Auctions Using Grid Distributions,” Annals of Applied Statistics, vol. 4 (4), 2073—2098.

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