Abstract
Structural asymmetric first-price auction estimation methods have provided numerous empirical studies. However, due to the latent nature of underlying valuations, the accuracy of estimates is not feasibly testable with field data, a fact that could inhibit empirical auction market designs and applications based on structural estimates. To assess their accuracy, we provide an analysis of estimates derived from experimental asymmetric auction data, in which researchers observe valuations. We test the null of statistical equivalence between the estimated and true value distributions against the alternative of non-equivalence. When advanced models are used, the Modified Kolmogorov-Smirnov test fails to reject the distributional equivalence, supporting structural asymmetric auction estimations for auction market studies. In addition, recovered efficiencies have plus-minus 2.5 percent precision, compared to the true efficiencies.
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Article note
A version of this paper was presented at the 2014 Industrial Organization: Theory, Empirics, and Experiments Conference in Alberobello (Italy); 2014 European Association for Research in Industrial Economics conference in Milan; 2015 International Industrial Organization Conference in Boston; 2015 Auction, Competition, Regulation, and Public Policy Conference in Lancaster (UK); 2016 Royal Economic Society Conference in Sussex (UK); and 2017 Econometric Society Asian Meeting in Hong Kong. We are grateful for the comments from conference session discussants: Daniel Garcia, A.M. (Sander) Onderstal, and Paulo Somaini. We are also thankful for the insightful comments provided by Jorge Balat, Dakshina De Silva, Matthew Gentry, Emmanuel Guerre, Timothy Hubbard, and Tong Li. The paper was previously circulated under the title of “Are Estimates of Asymmetric First-Price Auction Models Credible? Semi & Nonparametric Analyses.” Any errors are our own. The usual disclaimer applies.
Supplementary Material
The online version of this article offers supplementary material (DOI: https://doi.org/10.1515/jem-2017-0001).
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