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An Equilibrium Model of the First-Price Auction with Strategic Uncertainty: Theory and Empirics

Bernhard Kasberger

arXiv 15 Feb 2022 · Theoretical Economics · 1 citations (OpenAlex)

arXiv:2202.07517 · PDF · DOI · OpenAlex · Extracted main text

Abstract

In many first-price auctions, bidders face considerable strategic uncertainty: They cannot perfectly anticipate the other bidders' bidding behavior. We propose a model in which bidders do not know the entire distribution of opponent bids but only the expected (winning) bid and lower and upper bounds on the opponent bids. We characterize the optimal bidding strategies and prove the existence of equilibrium beliefs. Finally, we apply the model to estimate the cost distribution in highway procurement auctions and find good performance out-of-sample.

Citation extraction

46
references
68
in-text mentions
46
distinct cited
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self-citations
17,201
main-text words

appendix boundary found by appendix_command · 65% of the source is main text. Read the extracted text to check this.

Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Guerre, E., I. Perrigne, and Q. Vuong (2000) Optimal nonparametric estimation of first-price auctions1.00063100%
2Kasberger, B. and K. H. Schlag (2022) Robust bidding in first-price auctions: How to bid without knowing what others are doing self0.87452100%
3Bajari, P., S. Houghton, and S. Tadelis (2014, April) (2014) Bidding for incomplete contracts: An empirical analysis of adaptation costs0.81142100%
4Donald, S. G. and H. J. Paarsch (2002) Superconsistent estimation and inference in structural econometric models using extreme order statistics0.73732100%
5Linhart, P. and R. Radner (1989) Minimax-regret strategies for bargaining over several variables0.64422100%
6Savage, L. J (1951) The theory of statistical decision0.64422100%
7Winkler, G (1988) Extreme points of moment sets0.5112250%
8Lehrer, E. (2012, February) (2012) Partially specified probabilities: Decisions and games0.51121100%
9Klibanoff, P (1996) Uncertainty, decision, and normal form games0.51121100%
10Lo, K. C (1996) Equilibrium in beliefs under uncertainty0.51121100%

Showing the top 10 of 46 scored citations.