Structural Inferences from First-Price Auction Experiments

Paul Pezanis-Christou and Andres Romeu ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We use structural methods to assess equilibrium models of bidding with data from first-price auction experiments. We identify conditions to test the Nash equilibrium models for homogenous and for heterogeneous constant relative risk aversion when bidders private valuations are independent and uniformly drawn. The outcomes of our study indicate that behavior may have been affected by the procedure used to conduct the experiments and that the usual Nash equilibrium model for heterogeneous constant relative risk averse bidders does not consistently explain the observed overbidding. From an empirical standpoint, our analysis shows the possible drawbacks of overlooking the homogeneity hypothesis when testing symmetric equilibrium models of bidding and it puts in perspective the sensitivity of structural inferences to the available information.

Keywords: first-price auctions; private independent values; experimental data; structural econometric methods; Non Linear Least Squares; constant relative risk aversion (search for similar items in EconPapers)
JEL-codes: C1 C7 D44 (search for similar items in EconPapers)
Pages: 39
Date: 2002-11-19
New Economics Papers: this item is included in nep-exp, nep-mic and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:531.02

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