An Empirical Study of an Auction with Asymmetric Information

Kenneth Hendricks and Robert Porter

American Economic Review, 1988, vol. 78, issue 5, 865-83

Abstract: This paper examines federal auctions for drain age leases on the Outer Continental Shelf from 1959 to 1969. These are leases that are adjacent to tracts on which a deposit has been discovered. The authors find that the data strongly support the hypotheses that neighbor firms are better informed about the value of a lease than nonneighbor firms; that neighbor firms coordinate their bidding decisions; and that both types of firms bid strategically in accordance with the Bayesian-Na sh equilibrium model for first-price, sealed-bid auctions with asymmetric information. Copyright 1988 by American Economic Association.

Date: 1988
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