Empirical tests of information aggregation
By: Pai-Ling Yin
Series: Working paper / Division of Research, Harvard Business School -- 06-010; Working paper (Harvard Business School. Division of Research) -- 06-010
Publisher: Division of Research, Harvard Business School
Published: 2006
Place of publication: Boston
Language: eng
Number of pages: 16
Description: This paper proposes tests to empirically examine whether auction prices aggregate information away from the limit. These tests are based on 1) a combination of comparative statics with respect to the number of bidders and the dispersion of information signals and 2) comparison of actual prices to predicted Nash equilibrium prices based on observed auction parameters. When applied to eBay online auctions for computers, these tests suggest that prices partially aggregate information, but do not converge to the common value. Even partial information aggregation may represent a potential efficiency gain over one-to-one trade of used goods with uncertain common values.
Notes: "This draft: June 2005 "--Added t.p.

Includes bibliographical references.