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Auction Theory: A Guide to the Literature
 JOURNAL OF ECONOMIC SURVEYS
, 1999
"... This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthco ..."
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Cited by 493 (4 self)
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This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthcoming.) We begin with the most fundamental concepts, and then introduce the basic analysis of optimal auctions, the revenue equivalence theorem, and marginal revenues. Subsequent sections address riskaversion, affiliation, asymmetries, entry, collusion, multiunit auctions, double auctions, royalties, incentive contracts, and other topics. Appendices contain technical details, some simple worked examples, and a bibliography for each section.
The winner’s curse and public information in common values auctions
 American Economic Review
, 1986
"... Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at ..."
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Cited by 123 (15 self)
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Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at
LogConcave Probability and its Applications
 Econom. Theory
, 1989
"... Many interesting propositions in the economics of information are built on the assumption that the log of the cumulative distribution function of a random variable is a concave function. This property is equivalent ..."
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Cited by 64 (1 self)
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Many interesting propositions in the economics of information are built on the assumption that the log of the cumulative distribution function of a random variable is a concave function. This property is equivalent
Identification of Standard Auction Models
, 2001
"... We present new identification results for models of firstprice, secondprice, ascending (English), and descending (Dutch) auctions. We analyze a general specification of the latent demand and information structure, nesting as special cases the pure private values and pure common values models, and ..."
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Cited by 60 (6 self)
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We present new identification results for models of firstprice, secondprice, ascending (English), and descending (Dutch) auctions. We analyze a general specification of the latent demand and information structure, nesting as special cases the pure private values and pure common values models, and allowing both ex ante symmetric and asymmetric bidders. We address identification of a series of nested models and derive testable restrictions that enable discrimination between models on the basis of observed data. The simplest model–that of symmetric independent private values–is nonparametrically identified even if only the transaction price from each auction is observed. For more complex models, identification and testable restrictions are obtained when additional information of one or more of the following types is available: (i) the identity of the winning bidder or other bidders, (ii) one or more bids in addition to the transaction price; (iii) exogenous variation in the number of bidders; (iv) bidderspecific covariates; (v) auctionspecific covariates. While many private values (PV) models are nonparametrically
Semiparametric Estimation of FirstPrice Auctions with Risk Averse Bidders
, 2000
"... This paper proposes a semiparametric estimation procedure of the firstprice auction model with risk averse bidders within the independent private values paradigm. We show that the model is nonidentified in general from observed bids. Moreover, any distribution of bids can be rationalized by an auct ..."
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Cited by 45 (1 self)
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This paper proposes a semiparametric estimation procedure of the firstprice auction model with risk averse bidders within the independent private values paradigm. We show that the model is nonidentified in general from observed bids. Moreover, any distribution of bids can be rationalized by an auction model with either constant relative risk aversion or constant absolute risk aversion. Thus identification of the model must be achieved through additional restrictions. We then establish semiparametric identification under a common but unknown support condition and parameterization of the bidders' utility function. Next we propose a semiparametric method for estimating the corresponding auction model using local polynomial estimators. This method involves several steps and allows to recover the parameters of the utility function as well as the bidders' private values and their distribution. An attractive computational advantage of our method is that it does not require solving the differential equation characterizing the equilibrium strategy. An illustration of the method on U.S. Forest Service timber sales is proposed. In particular, a test of bidders' risk neutrality is performed.
Resource selection games with unknown number of players
, 2006
"... In the context of preBayesian games we analyze resource selection games with unknown number of players. We prove the existence and uniqueness of a symmetric safetylevel equilibrium in such games and show that in a game with strictly increasing linear cost functions every player benefits from the c ..."
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Cited by 35 (9 self)
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In the context of preBayesian games we analyze resource selection games with unknown number of players. We prove the existence and uniqueness of a symmetric safetylevel equilibrium in such games and show that in a game with strictly increasing linear cost functions every player benefits from the common ignorance about the number of players. In order to perform the analysis we define safetylevel equilibrium for preBayesian games, and prove that it exists in a compactcontinuousconcave setup; in particular it exists in a finite setup. 1
A note on auctions with endogenous participation
 REVIEW OF ECONOMIC DESIGN
, 1996
"... In this paper, we study an auction where bidders only know the number of potential applicants. After seeing their values for the object, bidders decide whether or not to enter the auction. Players may not want to enter the auction since they have to pay participation costs. We characterize the optim ..."
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Cited by 34 (0 self)
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In this paper, we study an auction where bidders only know the number of potential applicants. After seeing their values for the object, bidders decide whether or not to enter the auction. Players may not want to enter the auction since they have to pay participation costs. We characterize the optimal bidding strategies for both first and secondprice sealedbid auction when participation is endogenous. We show that only bidders with values greater than a certain cutoff point will bid in these auctions. In this context, both auctions generate the same expected revenue. We also show that, contrarily to the predictions of the fixedn literature, the seller’s expected revenue may decrease when the number of potential participants increases. In addition, we show that it is optimal for the seller to charge an entry fee, which contrasts greatly with results from the existing literature on auctions with entry.
Comparing open and sealed bid auctions: theory and evidence from timber auctions. Working paper
, 2005
"... We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic e¤ects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, a ..."
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Cited by 32 (4 self)
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We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic e¤ects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We propose a model, which extends the theory of private value auctions with heterogeneous bidders to capture participation decisions, that can account for these qualititive e¤ects of auction format. We then calibrate the model using parameters estimated from the data and show that the model can explain the quantitative e¤ects as well. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice. We thank Phil Haile, Guido Imbens, Richard Levin, Paul Milgrom, and Ilya Segal for helpful suggestions, and Jerry Hausman for advice at the early stages of this project. We are especially grateful to Rob Porter for providing detailed and insightful comments on an earlier draft of the
Bidder Collusion
, 2004
"... Within the heterogeneous IPV model, we analyze bidder collusion at firstprice and secondprice auctions, allowing for withincartel transfers. Our focus is on cartels that contain a strict subset of all bidders and collusive mechanisms that do not rely on information from the auctioneer, such as th ..."
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Cited by 23 (0 self)
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Within the heterogeneous IPV model, we analyze bidder collusion at firstprice and secondprice auctions, allowing for withincartel transfers. Our focus is on cartels that contain a strict subset of all bidders and collusive mechanisms that do not rely on information from the auctioneer, such as the identity of the winner or the amount paid. We show that when a cartel cannot control the bids of its members, it can eliminate all competition among its members at a secondprice auction, but not at a firstprice auction. At a firstprice auction, when the cartel cannot control its members’ bids, cartel behavior is characterized by multiple cartel bids that are different but very close to one another. This finding has important empirical implications. If a cartel can control the bids of its members, it can suppress all ring competition at both a secondprice and a firstprice auction; however, if shill bidding is feasible, then a cartel at a firstprice auction does no better than one that cannot control its members’ bids.
Hidden reserve prices with risk averse bidders
, 2000
"... In this paper, we provide an alternative explanation for why auctioneers often keep the reserve price hidden or secret. We consider a standard independent private values environment in which the buyers are riskaverse and the seller has private information about her valuation of the object to be a ..."
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Cited by 19 (0 self)
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In this paper, we provide an alternative explanation for why auctioneers often keep the reserve price hidden or secret. We consider a standard independent private values environment in which the buyers are riskaverse and the seller has private information about her valuation of the object to be auctioned. The seller uses a Þrstprice sealedbid auction mechanism combined with either an announced reserve price or a hidden reserve price. We compare the sellers ex ante expected proÞts under these two policies and Þnd that the optimal hidden reserve price policy generates higher expected proÞts for the seller when the buyers are fairly riskaverse under particular restrictions on buyers preferences and the distributions of private values. As the number of the buyers increases, the hidden reserve price is more likely to dominate. Numerical methods are used to demonstrate the generality of our main results. Journal of Economic Literature Clas