Econometrics of First-Price Auctions with Binding Reservation Prices*
نویسنده
چکیده
This paper considers the structural estimation of first-price auctions with binding reservation prices. The presence of binding reservation prices complicates the structural analysis as the number of autual bidders is not equal to the number of potential bidders. Ignoring such an issue will lead to inconsistent estimates due to the endogeneity of the number of actual bidders. Allowing for the number of potential bidders to depend on the heterogeneity of auctioned objects and hence vary across the auctions, we propose an MSM estimator to estimate the parameters in the distribution of private values and the distribution of the number of potential bidders using the observed bids and the numbers of actual bidders. The estimator can be used to test the validity of the theoretical auction model. Whether the reservation prices are binding can also be tested. As such, this paper provides a general method for the structural analysis of first-price auctions with binding reservation prices. Field: D44, C15
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