A Consistent Econometric Test for Bid Interdependence in Repeated Second-Price Auctions with Posted Prices

Andreas C. Drichoutis, Rodolfo M. Nayga, Jr, Panagiotis Lazaridis, Beom Su Park

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In repeated second-price experimental auctions, the winning bid is normally posted after each round. The posting of these winning prices after each round can result in bids submitted in later rounds to be interdependent with posted prices from earlier rounds. Several approaches in the past have tried to scrutinize their experimental data for value interdependence by regressing bids on lagged market prices or lagged bids and ignoring the inherent endogeneity problem. This paper introduces a formal test for bid interdependence in repeated second-price auctions with posted prices using a dynamic panel model. We then apply this test to formally check the presence of bid interdependence in three datasets used in previous studies.

Original languageEnglish
Pages (from-to)329-341
Number of pages13
JournalAtlantic Economic Journal
Volume39
Issue number4
DOIs
Publication statusPublished - 2011 Dec 1
Externally publishedYes

Fingerprint

Econometric tests
Posted prices
Interdependence
Second-price auction
Bid
Dynamic panel model
Endogeneity
Market price
Experimental auctions

Keywords

  • Bid interdependence
  • Dynamic panel estimator
  • Experimental auctions
  • Second-price auction

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

A Consistent Econometric Test for Bid Interdependence in Repeated Second-Price Auctions with Posted Prices. / Drichoutis, Andreas C.; Nayga, Jr, Rodolfo M.; Lazaridis, Panagiotis; Park, Beom Su.

In: Atlantic Economic Journal, Vol. 39, No. 4, 01.12.2011, p. 329-341.

Research output: Contribution to journalArticle

Drichoutis, Andreas C. ; Nayga, Jr, Rodolfo M. ; Lazaridis, Panagiotis ; Park, Beom Su. / A Consistent Econometric Test for Bid Interdependence in Repeated Second-Price Auctions with Posted Prices. In: Atlantic Economic Journal. 2011 ; Vol. 39, No. 4. pp. 329-341.
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