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The bidder exclusion effect
Author(s) -
Coey Dominic,
Larsen Bradley,
Sweeney Kane
Publication year - 2019
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12263
Subject(s) - common value auction , counterfactual thinking , revenue , econometrics , economics , independence (probability theory) , sample (material) , microeconomics , mathematics , statistics , finance , philosophy , chemistry , epistemology , chromatography
We introduce a new, simple‐to‐compute test of independence of valuations and the number of bidders for ascending button auctions with symmetric, conditionally independent private values. The test involves estimating the expected revenue drop from excluding a bidder at random, which can be computed as a scaled sample average of a difference of order statistics. This object also provides a bound on counterfactual revenue changes from optimal reserve pricing or bidder mergers. We illustrate the approach using data from timber auctions, where we find some evidence that bidder valuations and the number of participants are not independent.