Three essays in empirical auctions

This paper presents a new, copula based, two step semi-parametric estimation technique for structural estimation of distributions of bidders' unobserved valuations in first price auctions. In the first step, the marginal distributions of 'valuations' are nonparametrically estimated using the equilibrium distributions of observed bids. The second stage involves a simple maximum likelihood procedure to estimate the 'copula' parameter which measures the association (affiliation) between the valuations. By Sklar's (1959) theorem, the second stage is equivalent to estimating the joint distribution of valuations. The copula parameter was also used to test for a particular type of asymmetry among bidders. The copula parameter gives a measure of association and degree of asymmetry amongst bidders, which is useful for mechanism design and other relevant policy experiments. We present some Monte Carlo evidence. We apply our methodology to data from wildcat oil tract auctions.; In the second chapter, a theoretical dynamic auction model is formulated where the bidder asymmetry is endogenous. The seller sells multiple goods via a sequence of first price auctions. While bidders are ex-ante symmetric, the first period winner has an informational advantage in the second period bidding game and becomes a strong bidder. This endogenous asymmetry leads to excessive entry and overbidding in the first period relative to a one period game.; In the third chapter a three step estimation procedure is proposed to estimate the above model. The methodology is applied to data from OCS oil tract auctions. It was found that the federal government is only recovering 23% of the 'strong' buyers' willingness to pay in the second period. Bidders perceive the value of information to be at most 12% of their first period's informational rent. A new semi-parametric structural test cannot reject the hypothesis of the strong bidder's informational superiority in the second period and sets it at 18% relative to the weak bidder. These estimates are used to design an alternative mechanism and empirically show that government's revenue increases when the asymmetry is taken into account in allocating the goods.