Seminar: Harry J. Paarsch, Department of Economics, University of Melbourne.

Title: Semiparametric Estimation in Models of First-Price, Sealed-Bid Auctions with Affiliation.

Abstract:

Within the affiliated private-values paradigm, we develop a tractable empirical model of equilibrium behaviour at first-price, sealed-bid auctions. The model is non-parametrically identified, but estimating the primitives is plagued by the curse of dimensionality when the number of bidders is even moderately large, so we develop a semiparametric estimation strategy, focusing on the Archimedean family of copulae and implementing this framework using particular members— the Clayton, Frank, and Gumbel copulae. We apply our framework to data from low-price, sealed-bid auctions used by the Michigan Department of Transportation to procure road-resurfacing services, rejecting the hypothesis of independence and finding significant (and high) affiliation in cost signals.