prices and the winner s curse we usually assume that increases in supply allocation by rationing and exclusion of potential buyers reduce prices but all these activities raise the expected price in an important set of cases when common value assets are sold furthermore when we make the assumptions needed to rule out these anomalies for symmetric buyers small asymmetries among the buyers necessarily cause the anomalies to reappear our results help explain rationing in initial public offerings and outcomes of spectrum auctions we illustrate our results in the wallet game and in another new game we introduce the maximum game

sealed bids sunk costs and the process of competition how do firms recover precontract costs for example suppose 10 firms compete in a sealed bid auction for the right to explore and develop an offshore oil field each spends 500 000 to estimate the value of the field and to prepare its bid suppose this investigation reveals that the tract is worth approximately 20 million if sunk costs do not matter competition dictates that the winner must bid 20 million but if the winner is to recover its prebid costs the maximum offer can be only 19 5 million furthermore long run industry equilibrium considerations suggest that the highest bid will be only 15 million 20 million minus the total bid preparation costs of 5 million if competition forces firms to charge marginal cost why do firms ever invest in resources which become sunk in some industries inframarginal rents can be used to recover these costs however the example above as well as many others involves an all or none deci

bitcoin for energy commodities before and after the december 2013 crash diversifier hedge or safe haven abstractwe study the relationship between bitcoin and commodities by assessing the ability of bitcoin to act as a diversifier hedge or safe haven against daily movements in commodities in general and energy commodities in particular we focus on energy commodities because energy in the form of electricity is an essential input in the bitcoin production for the entire period results show that bitcoin is a strong hedge and a safe haven against movements in both commodity indices we further examine whether that ability is also present for non energy commodities and our analysis show insignificant results when energy commodities are excluded from the general commodity index we also account for the december 2013 bitcoin price crash and our results reveal that bitcoin hedge and safe haven properties against commodities and energy commodities are only present in the pre crash period whereas in the post crash period bitcoin is no more than a diversifier in addition to uncovering the time varying role o

determinants and shareholder wealth effects of the sales method in acquisitions we analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints auctions compared to negotiated deals are associated with significantly higher target announcement returns especially for relatively small targets bidder returns are positively related to auctions for bidders acquiring relatively small targets not for the full sample taking into account size differences we find that auctions decrease target gains and increase bidder gains expressed in dollars

litigation risk and ipo underpricing abstract we examine the relation between risk and ipo underpricing and test two aspects of the litigation risk hypothesis 1 firms with higher litigation risk underprice their ipos by a greater amount as a form of insurance insurance effect and 2 higher underpricing lowers expected litigation costs deterrence effect to adjust for the endogeneity bias in previous studies we use a simultaneous equation framework evidence provides support for both aspects of the litigation risk hypothesis

volatility estimation for bitcoin a comparison of garch models we explore the optimal conditional heteroskedasticity model with regards to goodness of fit to bitcoin price data it is found that the best model is the ar cgarch model highlighting the significance of including both a short run and a long run component of the conditional variance

markup pricing in mergers and acquisitions this paper studies the relation between the premiums in takeover bids involving exchange listed target firms from 1975 91 and the pre announcement stock price runups the evidence shows that the pre bid runup and the postannouncement increase in the target s stock price the markup are generally uncorrelated with little substitution between the runup and the markup the runup is an added cost to the bidder this finding has important implications for assessing the costs of insider trading it also raises interesting questions about the role of information from public capital markets in private takeover negotiations

do auctions induce a winner s curse new evidence from the corporate takeover market abstract we contrast the winner s curse hypothesis and the competitive market hypothesis as potential explanations for the observed returns to bidders in corporate takeovers the winner s curse hypothesis posits suboptimal behavior in which winning bidders fail to adapt their strategies to the level of competition and the amount of uncertainty in the takeover environment and predicts that bidder returns are inversely related to the level of competition in a given deal and to the uncertainty in the value of the target our measure of takeover competition comes from a unique data set on the auction process that occurs prior to the announcement of a takeover in our empirical estimation we control for the endogeneity between bidder returns and the level of competition in takeover deals controlling for endogeneity we find that the returns to bidders are not significantly related to takeover competition we also find that uncertainty in the value of the target does not reduce bidder returns related analysis indicates that prestigious investment banks do not promote overbidding analysis of post takeover operating performance also fails to find any negative effects of takeover competition as a whole the results indicate that the breakeven returns to bidders in corporate takeovers stem not from the winner s curse but from the competitive market for targets that occurs predominantly prior to the public announcement of bids

price clustering in bitcoin investor and media attention in bitcoin has increased substantially in recently years reflected by the incredible surge in news articles and considerable rise in the price of bitcoin given the increased attention there little is known about the behaviour of bitcoin prices and therefore we add to the literature by studying price clustering we find significant evidence of clustering at round numbers with over 10 of prices ending with 00 decimals compared to other variations but there is no significant pattern of returns after the round number we also support the negotiation hypothesis of harris 1991 by showing that price and volume have a significant positive relationship with price clustering at whole numbers

the resolution of failed banks during the crisis acquirer performance and fdic guarantees 2008 2013 abstract we find that winning bidders in fdic failed bank auctions from 2008 to 2013 experience substantial positive abnormal stock returns returns are inversely related to bid amounts after controlling for bid determinants consistent with wealth transfers from the fdic providing implicit subsidies to acquirers the results challenge arguments that wealth transfers in earlier crises stemmed from since eliminated bidding restrictions but support the prediction of cash in the market pricing theory that during crises resolution through acquisition requires subsidization winning bid amounts are related to proxies for cash in the market pricing fdic loss sharing not widely used before the recent failure wave is an important influence on bids

in search of the winner s curse earlier papers on the winner s curse have provided theoretical arguments that winning bidders in an auction will incur ex post losses even when all bidders use reasonable ex ante bidding strategies this paper demonstrates that these arguments are erroneous optimal ex ante bidders will never suffer from a winner s curse in an auction where only the winning bid is announced furthermore such bidders will on the average not suffer from a winner s curse in an auction where all bids are announced thus if a winner s curse is a behavioral reality then bidders are not generally using ex ante optimal strategies

can cryptocurrencies be a safe haven a tail risk perspective analysis abstractcryptocurrencies are one of the most promising financial innovations of the last decade different from major stock indices and the commodities of gold and crude oil the cryptocurrencies e

an empirical study of an auction with asymmetric information this paper examines federal auctions for drain age leases on the outer continental shelf from 1959 to 1969 these are leases that are adjacent to tracts on which a deposit has been discovered the authors find that the data strongly support the hypotheses that neighbor firms are better informed about the value of a lease than nonneighbor firms that neighbor firms coordinate their bidding decisions and that both types of firms bid strategically in accordance with the bayesian nash equilibrium model for first price sealed bid auctions with asymmetric information

why do sellers usually prefer auctions we compare the most common methods for selling a company or other asset when participation is costly a simple simultaneous auction and a sequential process in which potential buyers decide in turn whether to enter the bidding the sequential process is always more efficient but preemptive bids transfer surplus from the seller to buyers because the auction is more conducive to entry precisely because of its inefficiency it usually generates higher expected revenue we also discuss the effects of lock ups matching rights break up fees as in takeover battles entry subsidies etc

the inefficiency of bitcoin revisited a dynamic approach abstract this letter revisits the informational efficiency of the bitcoin market in particular we analyze the time varying behavior of long memory of returns on bitcoin and volatility 2011 until 2017 using the hurst exponent our results are twofold first r s method is prone to detect long memory whereas dfa method can discriminate more precisely variations in informational efficiency across time second daily returns exhibit persistent behavior in the first half of the period under study whereas its behavior is more informational efficient since 2014 finally price volatility measured as the logarithmic difference between intraday high and low prices exhibits long memory during all the period this reflects a different underlying dynamic process generating the prices and volatility

empirical testing of auction theory given the state of affairs in auction theory there is at least one model for instance to support any position one would care to take concerning the revenue of sealed bid vs open auctions it should not come as a surprise that a fair amount of empirical work in auctions is underway this paper reports the results of some recently completed research i first discuss papers in which the predictions being tested derive directly from the pure theory of auctions and then papers in which the predictions arise out of an application of auction theory to a related institution

structural stochastic volatility in asset pricing dynamics estimation and model contest abstract in the framework of small scale agent based financial market models the paper starts out from the concept of structural stochastic volatility which derives from different noise levels in the demand of fundamentalists and chartists and the time varying market shares of the two groups it advances several different specifications of the endogenous switching between the trading strategies and then estimates these models by the method of simulated moments msms where the choice of the moments reflects the basic stylized facts of the daily returns of a stock market index in addition to the standard version of msm with a quadratic loss function we also take into account how often a great number of monte carlo simulation runs happen to yield moments that are all contained within their empirical confidence intervals the model contest along these lines reveals a strong role for a tamed herding component the quantitative performance of the winner model is so good that it may provide a standard for future research

ad valorem tariff and spatial equilibrium models the objectives of this article are to illustrate theoretically and empirically how to incorporate an ad valorem tariff in spatial equilibrium models and show the equivalence of three approaches primal dual and mcp of spatial equilibrium trade modelling the article lays out in detail the theory empirical applications and the results for all three approaches so that trade modellers can easily follow and apply them in their work the primal approach is commonly used by spatial equilibrium modellers though the dual approach corresponds to the textbook depiction of consumer surplus producer surplus and gains from trade the mixed complementarity problem mcp is not commonly used by spatial equilibrium modellers though it is relatively simpler if the modeller knows the equilibrium conditions this article also presents advantages and disadvantages of each approach

effects of trade diversion and trade creation of mercosur on us and world apple markets apples are the third most valuable fruit in the united states and account for 18 of us fruit exports chile is a major competitor to the united states in the mercosur market since it is one of the leading apple producing countries and enjoys the tariff reductions as a member of mercosur consequently chilean exports displace us exports in mercosur in addition other mercosur members import more from lower cost chile leading to a reduction in production and an increase in consumption in these countries this study develops a theoretical and an empirical model of world apple market to quantify the trade diversion and trade creation effects of the mercosur free trade agreement and to estimate the welfare impacts

tobin s q and the gains from takeovers this paper analyzes the relation between takeover gains and the q ratios of targets and bidders for a sample of 704 mergers and tender offers over the period 1972 1987 target bidder and total returns are larger when targets have low q ratios and bidders have high q ratios the relation is strengthened after controlling for the characteristics of the offer and the contest this evidence confirms the results of the work by lang stulz and walkling and shows that their findings also hold for mergers and after controlling for other determinants of takeover gains in a recent paper lang stulz and walkling lsw 1989 document that the abnormal returns in tender offers are related to the tobin s q ratios of the targets and the bidders in particular they find that target bidder and total returns are higher when takeover targets have high q ratios and bidders have low q ratios where one is used as a cutoff point to separate high q firms from low q firms in fact bidders with high q ratios have significant positive abnormal returns when they engage in a takeover while bidders with low q ratios have significant negative abnormal returns the best takeovers in terms of value creation are those where a high q firm takes over a low q firm the opposite scenario holds for the worst case takeovers low q firms taking over high q firms if q is interpreted as a measure of managerial performance these findings imply that better performing firms also make better acquisitions and that more value can be created from taking over poorly performing companies while the results of lsw are insightful they leave a number of questions unanswered their sample consists only of tender offers several studies have documented that the returns to targets in mergers are smaller than those in tender offers see jensen and ruback 1983 and huang and walkling 1987 it would therefore be useful to see whether the lsw 1989 results hold for a larger sample which includes both mergers and tender offers previous research has also shown that the characteristics of the takeover hostile versus friendly and single versus multiple bidder the form of payment cash versus securities the time period before 1968 1968 1980 1981 and later and the relative size of target and bidder are important determinants of the magnitude of takeover gains and their distribution

the choice of issuance procedure and the cost of competitive and negotiated underwriting an examination of the impact of rule 50 previous research suggests that firms choose negotiated issuance over competitive despite its apparently higher net interest cost this result is shown to arise partly from failure to correct for a selectivity bias in the choice of issuance procedures two stage analysis is used in a model that includes qualitative and limited dependent variables to re estimate the net interest cost difference between competitive and negotiated issues results support the hypothesis that the choice of issuance procedure is consistent with shareholder wealth maximization examination of debt issues subject to rule 50 of the public utility holding company act indicates that the regulation as applied is not

the inefficiency of bitcoin bitcoin has received much attention in the media and by investors in recent years although there remains scepticism and a lack of understanding of this cryptocurrency we add to the literature on bitcoin by studying the market efficiency of bitcoin through a battery of robust tests evidence reveals that returns are significantly inefficient over our full sample but when we split our sample into two subsample periods we find that some tests indicate that bitcoin is efficient in the latter period therefore we conclude that bitcoin in an inefficient market but may be in the process of moving towards an efficient market

some evidence of the winner s curse the mathematical complexity of auction theory has restricted empirical work to qualitative tests of its basic predictions with mixed results this paper exploits the theory of order statistics to derive a nash bid function that is linear in its parameters allowing direct estimati on by linear least squares the bid function is fitted to a cross section of auctions for highway construction contracts from thirty three states and provides support for several hypotheses of the theory of common value auctions copyright 1988 by american economic association

corporate takeover bids methods of payment and bidding firms stock returns this study explores the role of the method of payment in explaining common stock returns of bidding firms at the announcement of takeover bids the results reveal significant differences in the abnormal returns between common stock exchanges and cash offers the results are independent of the type of takeover bid i e merger or tender offer and of bid outcomes these findings supported by analysis of nonconvertible bonds are attributed mainly to signalling effects and imply that the inconclusive evidence of earlier studies on takeovers may be due to their failure to control for the method of payment recent studies on corporate takeovers provide inconclusive results on the valuation effects of acquisitions on the common stock of bidding firms 1 substantial differences are reported between the studies that analyze acquisitions initiated as tender offers and those that confine their samples to merger proposals the existence of mixed empirical findings for the bidding firms makes it difficult to interpret existing evidence and to draw conclusions about the managers acquisition motivations nevertheless the reason for the substantial difference between empirical findings on mergers and tender offers still remains an unresolved issue it is observed however that mergers are usually common stock exchange offers whereas tender offers are usually cash offers given that different methods of financing a project have different signalling implications myers and majluf 39 the differential stock returns of bidders in mergers and tender offers may be due to the method of acquisition financing

the economics of bitcoin price formation abstractthis is the first article that studies bitcoin price formation by considering both the traditional determinants of currency price e g market forces of supply and demand and digital currencies specific factors e g bitcoin attractiveness for investors and users the conceptual framework is based on the barro 1979 model from which we derive testable hypotheses using daily data for five years 2009 2015 and applying time series analytical mechanisms we find that market forces and bitcoin attractiveness for investors and users have a significant impact on bitcoin price but with variation over time our estimates do not support previous findings that macro financial developments are driving bitcoin price in the long run

on the inefficiency of bitcoin abstract urquhart 2016 investigated the market efficiency of bitcoin by means of five different tests on bitcoin returns it was concluded that the bitcoin returns do not satisfy the efficient market hypothesis we show here that a simple power transformation of the bitcoin returns do satisfy the hypothesis through the use of eight different tests the transformation used does not lead to any loss of information

auctions of companies robert g hansen auctions of companies are conducted in ways that contradict received auction theory the major puzzles are 1 sellers restrict the number of bidders 2 sellers restrict the number of bidders 3 bidders are screened by an initial round of nonbinding bids and 4 bidders offer and sellers sometimes accept preemptive bids puzzles 1 2 and 4 are explained by assuming that some information concerning the company can if released reduce the value of the company puzzle 3 is explained as a way for sellers to select the highest valued bidders equilibrium is maintained by using the initial bids to set a reserve price for the final bidding round jel d44 d82 g34 i introduction from 1989 to 1998 19 593 private companies were reported to be bought and sold in the united states many through an auction process the total value of these transactions was in excess of 315 billion 1 in addition from 1989 to 1998 there were 13 134 reported divestitures of divisions subsidiaries or product lines the value of these transactions was in excess of 900 billion perhaps not surprisingly an industry of advisors auctioneers exists to facilitate these transactions and the institutional framework by which auctions of companies are conducted has become somewhat standardized the purpose of this article is to apply auction theory to explain this standardized institutional framework the article proceeds as follows section ii describes the standardized process used for selling private companies or divisions of public companies points out how these practices conflict with certain aspects of received auction theory and presents initial arguments that explain the rationality of the practic es in section iii a more formal model is developed to show how some of the standard corporate auction practices can be explained section iv deals with what may be the most intriguing institutional practice the use of preliminary nonbinding indications of interest section v concludes the article with a preliminary discussion of entry fees and preemptive bidding ii the typical auction process and consistency with auction theory the typical process for selling a private company or division of a public company runs as follows 2 upon making the decision to sell the selling company will retain or will already have retained an advisor who will serve as de facto auctioneer the auctioneer drawing on knowledge of the selling company will draw up a preliminary list of potential bidders this list will probably include competitors suppliers customers and acquisition oriented conglomerates or leveraged buyout houses the advisor will also exercise his judgment at this time as to whether or not a prospective bidder will be willing and able to complete a transaction at a satisfactory price if a negative judgment is made that potential bidder will likely be excluded from further participation the remaining prospective bidders will receive a very cursory description of the selling company and will be offered a more in depth offering memorandum if they sign a confidentiality agreement although the first cursory description may no t even include the selling company s name the offering memorandum will be quite detailed including the sort of information that would typically be in a public corporation s securities and exchange commission 10k filing as well as traditionally confidential information on current issues at the selling company overview of costs plans for market and product developments and so on the next step is for the prospective bidders to submit preliminary nonbinding indications of interest for the selling company these indications will be either a number or a range of numbers that are supposed to represent bidders first approximations of their estimates of the value of the target 3 the preliminary indications are then used by the auctioneer to further reduce the number of bidders who will proceed further only the top bidders on their list are permitted to go forward 4 although the screening is clearly not as straightforward as the preceding passage presumes there is no doubt that the likelihood of ad mittance to the next round increases with the preliminary bid even though that bid is nonbinding

some stylized facts of the cryptocurrency market abstractwe examine the stylized facts of eight forms of cryptocurrencies representing almost 70 of cryptocurrency market capitalization in particular the empirical results show that 1 there ex

export liberalization and household welfare the case of rice in vietnam vietnam has rapidly become one of the three largest rice exporters in the world in spite of a binding export quota this article uses a multimarket spatial equilibrium model to examine the effect of further liberalization on regional rice prices household data are then used to calculate the welfare impact of these price changes on different household groups the results suggest that although rice export liberalization would raise food prices and exacerbate regional inequality it would also increase average real income and reduce slightly the incidence and severity of poverty we explore several explanations of these apparently paradoxical results

the gains to bidding firms from merger abstract this study examines the effect of mergers on the wealth of bidding firms shareholders bidding firms gain significantly during the twenty one days leading to the announcement of each of their first four merger bids these results fail to support the capitalization hypothesis that bidders gains are captured at the beginning of merger programs bidders abnormal returns are positively related to the relative size of the merger partners and the gains during the announcement period are larger for mergers which are successful though the gains are larger prior to 1969 merger bids after 1969 also significantly increase the wealth of bidding firms shareholders the results suggest that the inconclusive findings of the earlier studies may be due to methodological deficiencies the findings of this study are consistent with value maximizing behavior by the management of bidding firms

us brazil cotton dispute and the world cotton market us policies for its cotton producers depress world cotton prices adversely affecting exporters such as brazil which filed a complaint to the wto despite wto rulings in brazil s favour meting out the right to enact retaliatory countermeasures the united states continues to subsidise its cotton farmers after prolonged negotiations brazil and the united states reached an agreement which allowed the united states to pay brazil to refrain from enforcing the countermeasures to capture the adverse effects of us policies theoretical analyses are conducted the theoretical model is extended by constructing an empirical model of the world cotton market the adverse effects of us policies on brazil are estimated and compared to the compensation the united states pays brazil

bidding in common value auctions how the commercial construction industry corrects for the winner s curse experienced construction industry executives suffer from a winner s curse in laboratory common value auction markets dyer et al dyer d j h kagel d levin 1989 a comparison of naive and experienced bidders in common value offer auctions laboratory analysis econom j 99 108 115 this paper identifies essential differences between field environments and the economic theory underlying the laboratory markets that account for the executives success in the field and a winner s curse in the lab these are 1 industry specific mechanisms which enable contractors to escape the winner s curse even when they bid too low 2 learned industry specific evaluative processes which enable experienced contractors to avoid the winner s curse in the first place and 3 important private value elements that underlie bidding also identified are a number of industry specific bidding characteristics whose evolution can be explained using modern auction theory lessons are drawn regarding the use of experime

some evidence on the winner s curse comment the theory of auctions has developed extensively since robert b wilson s 1977 seminal paper due to the complexity of equilibrium strategies however empirical researchers have been slow to incorporate and test the most basic theoretical precepts typical empirical studies estimate ad hoc bidding models with no attempt to ascertain whether the implied behaviors are theoretically plausible the recent paper by stuart e thiel 1988 attempts to bridge this gap thiel obtains closed form equilibrium bidding functions that are theoretically motivated and linear in parameters and which facilitate empirical estimation and testing if widely applicable thiel s empirical approach would constitute a major methodological breakthrough unfortunately thiel s approach applies only in special cases that are of limited practical interest linear bidding strategies emerge only under circumstances that are unlikely in the real world the limited range of thiel s approach may not be apparent to casual readers of his paper even when linear strategies do exist they are not unique under the special assumptions of thiel s model for each nash equilibrium in linear strategies there exists a related family of nonlinear strategies thus further justification must be found for basing empirical research on the linear specification we also note a significant error in thiel s work the symmetric strategies he derives on the basis of order statistics do not constitute a nash equilibrium we derive proper expressions for the symmetric nash strategies and discuss a specification error in thiel s regression analysis that would account for the mixed results obtained in his application to the highway construction industry

the role of accounting quality in the m a market we examine the role of target firms accounting quality in the merger and acquisition process we predict that target firm accounting quality will be positively associated with 1 the likelihood that the deal will be structured as a negotiation rather than as an auction 2 the speed with which the deal reaches final resolution and 3 the likelihood that the proposed deal is ultimately completed our empirical evidence is consistent with these predictions these results complement and extend existing findings on target firm accounting quality and provide new evidence that financial accounting quality relates positively to the efficient allocation of the economy s capital resources this paper was accepted by mary barth accounting

anomalies the winner s curse abstract next time that you find yourself a little short of cash for lunch try the following experiment in your class take a jar and fill it with coins noting the total value of the coins now a

crypto currency bubbles an application of the phillips shi yu 2013 methodology on mt gox bitcoin prices the creation of bitcoin heralded the arrival of digital or crypto currency and has been regarded as a phenomenon since its introduction it has experienced a meteoric rise in price and rapid growth accompanied by huge volatility swings and also attracted plenty of controversies which even involved law enforcement agencies hence claims abound that bitcoin has been characterized by bubbles ready to burst any time e g the recent collapse of bitcoin s biggest exchange mt gox this has earned plenty of coverage in the media but surprisingly not in the academic literature we therefore fill this knowledge gap we conduct an econometric investigation of the existence of bubbles in the bitcoin market based on a recently developed technique that is robust in detecting bubbles that of phillips et al 2013a over the period 2010 2014 we detected a number of short lived bubbles most importantly we found three huge bubbles in the latter part of the period 2011 2013 lasting from 66 to 106 days with the

the costs of bankruptcy chapter 7 liquidation versus chapter 11 reorganization our paper explores a comprehensive sample of small and large corporate bankruptcies in arizona and new york from 1995 to 2001 bankruptcy costs are very heterogeneous and sensitive to the measurement method used we find that chapter 7 liquidations appear to be no faster or cheaper in terms of direct expense than chapter 11 reorganizations however chapter 11 seems to preserve assets better thereby allowing creditors to recover relatively more our paper also provides a large number of further empirical regularities our paper analyzes the largest sample of corporate bankruptcies to date we research approximately 300 cases from the arizona and new york federal bankruptcy courts from 1995 to 2001 these cases consist of 1 both publicly traded and privately held corporations and 2 both chapter 7 liquidations and chapter 11 reorganizations this sample is practically the entire population of unique corporate bankruptcies in these courts our paper s primary objective is to measure how the two available bankruptcy procedures differ especially but not only in terms of cost we explore four variables namely the change in the estate s value during bankruptcy a measure of indirect costs the time spent in bankruptcy another and more common measure of indirect costs the expenses submitted to and approved by the bankruptcy court a measure of direct costs and the recovery rates for creditors and apr violations our most important findings are that chapter 7 liquidations are not cheaper than chapter 11 reorganizations particularly after we control for endogenous self selection of firms into bankruptcy procedure bankruptcy professionals attorneys accountants trustees regularly end up with most of the post bankruptcy firm s value in chapter 7 arturo bris is at imd yale school of management and ecgi ivo welch is at brown uni

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices