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Testing Equilibrium Behaviour At First-Price, Sealed-Bid Auctions With Discrete Bid Increments

Author

Listed:
  • Harry J. Paarsch
  • Jacques Robert
Abstract
Within the independent private-values paradigm, we derive the equilibrium implications of purposeful bidding behaviour at single-unit, first-price, sealed-bid auctions when discrete increments are imposed on bidding. While equilibrium purposeful behaviour with discrete bid increments is different from that which would obtain were continuous variation in bids permitted, these differences typically disappear as the bid increments go to zero. But discrete bid increments are a common feature at many real-world auctions. Moreover, their presence can simplify computation when estimating and testing auction models. Our approach fits within a model of incomplete inference and allows us to test sequentially for symmetric, equilibrium purposeful behaviour as well as asymmetric, equilibrium purposeful behaviour. We demonstrate the utility of the approach by applying it to data from laboratory experiments. Dans le cadre du modèle d'enchères à valeurs privées et indépendantes, nous dérivons les implications empiriques du comportement d'équilibre dans les enchères à enveloppe scellée au premier prix, lorsque les incréments sont discrets. Bien que les comportements d'équilibre diffèrent lorsque les mises prennent des valeurs discrètes plutôt que continues, ces différences disparaissent typiquement comme les incréments tendent vers zéro. En pratique, les mises dans les enchères prennent des valeurs discrètes. De plus, ceci peut simplifier les calculs nécessaires pour estimer et tester les modèles d'enchères. Notre approche s'insère dans le cadre d'un modèle d'inférence incomplet et nous permet de tester si les données sont cohérentes avec un comportement d'équilibre dans le cadre d'un modèle symétrique aussi bien qu'asymétrique. Nous démontrons l'utilité de l'approche en l'appliquant à des données générées à partir d'expériences en laboratoire.

Suggested Citation

  • Harry J. Paarsch & Jacques Robert, 2003. "Testing Equilibrium Behaviour At First-Price, Sealed-Bid Auctions With Discrete Bid Increments," CIRANO Working Papers 2003s-32, CIRANO.
    • Handle: RePEc:cir:cirwor:2003s-32
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    File URL: https://cirano.qc.ca/files/publications/2003s-32.pdf
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    References listed on IDEAS

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    1. Emmanuel Guerre & Isabelle Perrigne & Quang Vuong, 2000. "Optimal Nonparametric Estimation of First-Price Auctions," Econometrica, Econometric Society, vol. 68(3), pages 525-574, May.
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    Cited by:

    1. Ignacio Esponda, 2008. "Information feedback in first price auctions," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 491-508, June.

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    Keywords

    inference in auctions; discrete bidding; asymmetric auctions; inférence dans les enchères; mises à valeur discrètes; enchères asymétriques;
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