NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions

Philip A. Haile, Han Hong, Matthew Shum

NBER Working Paper No. 10105
Issued in November 2003
NBER Program(s):   IO

We develop tests for common values at first-price sealed-bid auctions. Our tests are nonparametric, require observation only of the bids submitted at each auction, and are based on the fact that the winner's curse' arises only in common values auctions. The tests build on recently developed methods for using observed bids to estimate each bidder's conditional expectation of the value of winning the auction. Equilibrium behavior implies that in a private values auction these expectations are invariant to the number of opponents each bidder faces, while with common values they are decreasing in the number of opponents. This distinction forms the basis of our tests. We consider both exogenous and endogenous variation in the number of bidders. Monte Carlo experiments show that our tests can perform well in samples of moderate sizes. We apply our tests to two different types of U.S. Forest Service timber auctions. For unit-price ( scaled') sales often argued to fit a private values model, our tests consistently fail to find evidence of common values. For lumpsum' sales, where a priori arguments for common values appear stronger, our tests yield mixed evidence against the private values hypothesis.

download in pdf format
   (1131 K)

email paper

This paper is available as PDF (1131 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10105

Users who downloaded this paper also downloaded these:
Eaton and Kortum w6253 Technology and Bilateral Trade
Athey and Haile w12126 Empirical Models of Auctions
Davis and Harrigan w13139 Good Jobs, Bad Jobs, and Trade Liberalization
Halac and Yared w18545 Fiscal Rules and Discretion under Persistent Shocks
Aizenman, Chinn, and Ito w14533 Assessing the Emerging Global Financial Architecture: Measuring the Trilemma's Configurations over Time
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us