TY  - JOUR
AU  - Athey,Susan
AU  - Levin,Jonathan
TI  - Information and Competition in U.S. Forest Service Timber Auctions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7185
PY  - 1999
Y2  - June 1999
UR  - http://www.nber.org/papers/w7185
L1  - http://www.nber.org/papers/w7185.pdf
N1  - Author contact info:
Susan Athey
Department of Economics
Harvard University
1875 Cambridge St.
Cambridge, MA 02138
Tel: 650/725-8696
Fax: 650/725-5702
E-Mail: athey@fas.harvard.edu

Jonathan D. Levin
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA  94305-6072
Tel: 650/723-5962
E-Mail: jdlevin@stanford.edu
AB  - This paper studies the bidding behavior of firms in U.S. Forest Service timber auctions in 1976--1990. When conducting timber auctions, the Forest Service publicly announces its estimates of the tract characteristics before the auction, and each bidder additionally has an opportunity to inspect the tract and form its own private estimates. We build a model that incorporates both differential information and the fact that bids placed in timber auctions are multidimensional. The theory predicts that bidders will strategically distort their bids based on their private information, a practice known as 'skewed bidding.' Using a dataset that includes both the public ex ante Forest Service estimates and the ex post realizations of the tract characteristics, we test our model and provide evidence that bidders do possess private information. Our results suggest that private information affects Forest Service revenue and creates allocational inefficiency. Finally, we establish that risk aversion plays an important role in bidding behavior.
ER  -