TESTING AFFILIATION IN PRIVATE-VALUES MODELS OF FIRST-PRICE AUCTIONS USING GRID DISTRIBUTIONS

Luciano I. de Castro; Harry J. Paarsch

doi:10.1214/10-AOAS344

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TESTING AFFILIATION IN PRIVATE-VALUES MODELS OF FIRST-PRICE AUCTIONS USING GRID DISTRIBUTIONS

Journal article

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Peer reviewed

TESTING AFFILIATION IN PRIVATE-VALUES MODELS OF FIRST-PRICE AUCTIONS USING GRID DISTRIBUTIONS

Luciano I. de Castro and Harry J. Paarsch

The annals of applied statistics, Vol.4(4), pp.2073-2098

12/01/2010

DOI: 10.1214/10-AOAS344

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Abstract

Within the private-values paradigm, we construct a tractable empirical model of equilibrium behavior at first-price auctions when bidders' valuations are potentially dependent, but not necessarily affiliated. We develop a test of affiliation and apply our framework to data from low-price, sealed-bid auctions held by the Department of Transportation in the State of Michigan to procure road-resurfacing services: we do not reject the hypothesis of affiliation in cost signals.

Mathematics

Physical Sciences

Science & Technology

Statistics & Probability

Details

Title: Subtitle: TESTING AFFILIATION IN PRIVATE-VALUES MODELS OF FIRST-PRICE AUCTIONS USING GRID DISTRIBUTIONS
Creators: Luciano I. de Castro - Northwestern University
Harry J. Paarsch - University of Melbourne
Resource Type: Journal article
Publication Details: The annals of applied statistics, Vol.4(4), pp.2073-2098
Publisher: Inst Mathematical Statistics
DOI: 10.1214/10-AOAS344
ISSN: 1932-6157
eISSN: 1941-7330
Number of pages: 26
Language: English
Date published: 12/01/2010
Academic Unit: Economics
Record Identifier: 9984380392402771

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