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  4. May 2022
  5. Multidimensional Auctions of Contracts: An Empirical Analysis

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Multidimensional Auctions of Contracts: An Empirical Analysis

  • Yunmi Kong
  • Isabelle Perrigne
  • Quang Vuong
American Economic Review
vol. 112, no. 5, May 2022
(pp. 1703–36)
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Abstract

In this paper, we conduct a structural analysis of multi-attribute auctions of contracts with a general allocation rule when private information is multidimensional. Upon modeling bidders' contract value that accounts for their endogenous ex post actions, we non-parametrically identify bidders' private information from their bids and estimate their joint distribution. Analyzing cash-royalty auctions of Louisiana oil leases, we find government revenue worse and development rates no better than in a cash auction with a fixed royalty in view of adverse selection and moral hazard. Our findings revise conventional wisdom on the optimality of multi-attribute auctions.

Citation

Kong, Yunmi, Isabelle Perrigne, and Quang Vuong. 2022. "Multidimensional Auctions of Contracts: An Empirical Analysis." American Economic Review, 112 (5): 1703–36. DOI: 10.1257/aer.20200864

Additional Materials

JEL Classification

  • D44 Auctions
  • D82 Asymmetric and Private Information; Mechanism Design
  • D86 Economics of Contract: Theory
  • H82 Governmental Property
  • Q35 Hydrocarbon Resources