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SEALED‐BID VERSUS OPEN AUCTIONS: THE EVIDENCE
Author(s) -
HANSEN ROBERT G.
Publication year - 1986
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1986.tb01801.x
Subject(s) - common value auction , economics , unique bid auction , estimator , yield (engineering) , ordinary least squares , econometrics , proxy bid , bid shading , revenue , vickrey auction , microeconomics , mathematics , mathematical economics , statistics , auction theory , finance , physics , thermodynamics
Data from U.S. Forest Service timber auctions are used to test Vickrey's original proposition that sealed‐bid and open auctions yield equal revenue. Models for the high‐bid in an auction are specified and estimated using three different procedures: ordinary least squares, two stage least squares, and maximum likelihood. The second two procedures include a second equation which accounts for the Forest Service's auction choice and therefore control for selection bias. These two procedures, which unlike ordinary least squares yield consistent estimators, imply a statistically and economically insignificant difference in high‐bids between sealed‐bid and open auctions.