EconPapers    
Economics at your fingertips  
 

Distinguishing Incentive from Selection Effects in Auction-Determined Contracts

Laurent Lamy, Manasa Patnam () and Michael Visser
Additional contact information
Manasa Patnam: IMF.

No 2019-15, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper develops a novel approach to estimate how contract and principal-agent characteristics influence an ex-post performance outcome when the matching between agents and principals derives from an auction process. We propose a control-function approach to account for the endogeneity of contracts and matching. This consists of, first, estimating the primitives of an interdependent values auction model - which is shown to be non-parametrically identified from the bidding data - second, constructing control functions based on the distribution of the unobserved private signals conditional on the auction outcome. A Monte Carlo study shows that our augmented outcome equation corrects well of the endogeneity biases, even in small samples. We apply our methodology to a labor market application: we estimate the effect of sports players’ auction-determined wages on their individual performance.

Keywords: Econometrics of Contracts, Econometrics of Auctions; Structural Econometrics; Endogenous Matching; Polychotomous Sample Selection; Wage-Performance Elasticity. (search for similar items in EconPapers)
JEL-codes: C01 C29 C57 D44 M52 Z22 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2019-09-20
New Economics Papers: this item is included in nep-cta, nep-des and nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://crest.science/RePEc/wpstorage/2019-15.pdf CREST working paper version (application/pdf)

Related works:
Journal Article: Distinguishing incentive from selection effects in auction-determined contracts (2023) Downloads
Working Paper: Distinguishing Incentive from Selection Effects in Auction-Determined Contracts (2023) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crs:wpaper:2019-15

Access Statistics for this paper

More papers in Working Papers from Center for Research in Economics and Statistics Contact information at EDIRC.
Bibliographic data for series maintained by Secretariat General () and Murielle Jules Maintainer-Email : murielle.jules@ensae.Fr.

 
Page updated 2024-07-21
Handle: RePEc:crs:wpaper:2019-15