Dan Quint's Research Page
(by topic) (show list) (home)
Ascending/English Auctions
- Empirical Methods and Issues
Much of my research
is on empirical issues faced when using bid data from English (or
ascending-price) auctions, and developing empirical methods to deal with these
issues.
Three of these
papers - Quint 2008 and Aradillas-López et al. 2013
and 2016 – are closely connected. Quint
2008 shows that if you interpret bids from an English auction under the
assumption of independent private values when bidder values are in fact
affiliated, your reserve price counterfactuals will have a predictable bias:
you will overestimate the profit-maximizing reserve price, as well as the value
of setting any given reserve price. Aradillas-López et al. 2013 introduces a new estimation
strategy to deal with this and allow for affiliation (or general correlation)
in bidder valuations, exploiting exogenous variation in the number of bidders N to point-identify and estimate
pointwise bounds on the seller’s profit function and therefore bounds on the
optimal reserve. We also compare our
results to the results one would get from incorrectly assuming independent
private values, and find that the difference is substantial. Aradillas-López et
al. 2016 introduces econometric tests of both the independent values assumption
and the assumption of exogenous N, as
examples of a more general testing framework for nonlinear transformations of
conditional moment inequalities; reexamining the same data, we reject
independent private values but fail to reject correlated private values with
exogenous variation in the number of bidders.
One of the
limitations of the identification strategy in Aradillas-López
et al. 2013 is that while the valuation model is very general, achieving tight
bounds requires a lot of variation in N. Hernández, Quint and Turansick considers
a more special model, where correlation in bidder valuations is driven by an
additively separable common shock, apart from which values are
independent. Under this separability assumption, we show that the model is
point-identified under any exogenous variation in N – the number of bidders
need only take on two values. We extend
the result to settings with imperfect observability of N, and illustrate estimation of the model on data from eBay Motors
auctions.
“Common Values and
Low Reserve Prices” is another “sign-the-bias” paper. Here, I use a combination of theory and
simulation to show that if you analyze bid data from English auctions under the
assumption of (correlated) private values when in fact bidders have common or
interdependent values, you will once again likely overestimate both the optimal
reserve price and the value of setting any given reserve price.
Cristián Hernández, Daniel Quint, and Christopher Turansick, Estimation in English Auctions with Unobserved Heterogeneity (Dec 2019), accepted for publication, RAND Journal of Economics
(supplants Quint, Identification in Symmetric English Auctions with Additively Separable Unobserved Heterogeneity)
Daniel Quint, Common Values and Low Reserve Prices, Journal of Industrial Economics 65 (2), June 2017 (Appendix)
Andrés Aradillas-López, Amit Gandhi and Daniel Quint, A Simple Test for Moment
Inequality Models with an Application to English Auctions, Journal of Econometrics 194, September
2016 (Appendix)
Andrés Aradillas-López, Amit Gandhi and Daniel Quint, Identification and Inference in
Ascending Auctions with Correlated Private Values, Econometrica 81 (2), March 2013
(Appendix)
Daniel Quint, Unobserved
Correlation in Private-Value Ascending Auctions, Economics Letters 100 (3), September 2008 (Example
and Extensions)
Models of Complex
"Real-World" Trading Mechanisms
These papers all look at real-world institutions, mechanisms, or practices and use theoretical models to better understand why they exist, how they perform, and ideally how they could be improved. Quint and Hendricks (2018) looks at indicative bidding – the practice of using non-binding preliminary bids to reduce the set of buyers competing in a sale. We model indicative bids as cheap talk, and show that they can be partially, but not fully, revealing in equilibrium; and that when the number of buyers is large, the use of indicative bids increases payoffs to both the seller and the buyers. Boerner and Quint (2019) examines medieval regulations on brokerage, models this in the context of a buyer-seller matching problem, and analyzes the performance and welfare properties of the two most common forms of broker compensation; we find that the product-by-product choice of fee structure was generally consistent with welfare maximization. Van Bochove et al. (2017) examines a two-stage auction format used in a financial market in Amsterdam in the late 1700s, giving a simple bidding model to rationalize empirical patterns in auction-level data. Quint (2014) looks at patent pools – agreements to jointly license intellectual property owned by different firms, often in conjunction with the development of a technological standard – and focuses on a distinction made by regulators, between essential and non-essential patents, that had been ignored in the previous economics literature. In contrast to the previous literature, I find that complementarity between all the patents in the pool is not a sufficient condition for a pool to be welfare-enhancing, but that limiting the pool to essential patents does ensure any pool is welfare-enhancing.
Daniel Quint and Ken
Hendricks, A Theory of
Indicative Bidding, AEJ:
Microeconomics 10 (2), May 2018
(Appendix)
Lars Boerner and Daniel Quint, Medieval Matching
Markets (Apr 2019) (Appendix)
(discussion of an earlier version
on Al Roth’s Market
Design blog and Economic
Logic.)
Christiaan van Bochove, Lars Boerner, and Daniel
Quint, Anglo-Dutch Premium Auctions in
Eighteenth-Century Amsterdam (Jan 2017)
(Appendix)
Daniel Quint, Pooling With Essential And Nonessential
Patents, AEJ: Microeconomics 6
(1), February 2014
Other Topics – Auctions,
Bargaining, and Imperfect Competition
“Imperfect Competition with Complements And Substitutes” puts forward a model to understand price competition with horizontally-differentiated products which each consist of perfectly-complementary components supplied by different monopolists; I show conditions on a discrete choice demand system under which many intuitive comparative statics (such as price effects of mergers or cost changes) can be proven. “Looking Smart versus Playing Dumb…” examines when a bidder in a sealed-bid common-values auction benefits from being known to have improved information, and when he benefits more from knowing that information secretly. Caruana et al. (2007) models multilateral bargaining in a setting where players receive their demanded shares if and only if their demands sum to no more than the total size of the “pie” and as the game proceeds it becomes increasingly costly to change ones demand; we show a unique equilibrium exists in which agreement is reached immediately, with players with higher switching costs receiving larger shares due to their greater commitment ability. Quint and Einav (2005) uses a similar dynamic model to generate a unique equilibrium prediction in an oligopoly entry model with heterogeneous entry costs. “A Simple Example to Illustrate the Linkage Principle” offers exactly that: I use a numerical example to demonstrate the intuition behind the revenue-superiority of “open” to “closed”-format ascending auctions and quantify the magnitude of the difference. Lien and Quint (2011) shows how package bidding and “aggregate” reserve prices in a simple two-good setting can lead to an interesting non-monotonicity of equilibrium.
Daniel Quint, A Simple Example to Illustrate the Linkage Principle (Apr 2016)
Daniel Quint, Imperfect Competition with
Complements And Substitutes, Journal
of Economic Theory 152, July 2014 (Appendix)
Daniel Quint, Looking
Smart versus Playing Dumb in Common-Value Auctions, Economic Theory 44 (3), September 2010
Guillermo Caruana, Liran Einav, and Daniel Quint, Multilateral Bargaining with Concession Costs, Journal of Economic Theory 132 (1), January 2007
Daniel Quint and Liran Einav, Efficient Entry,
Economics Letters 88 (2), August 2005
Yuanchuan Lien and Daniel Quint, Bidding Reversals in a Multiple-Good Auction with Aggregate Reserve Price (Jan 2011) (Appendix)
Other Publications
Daniel Quint, Patent Pools, The New Palgrave Dictionary of Economics Online, Eds. Steven Durlauf and Lawrence Blume, Palgrave Macmillan, 2008
Daniel Quint, Leiba Rodman, and Ilya Spitkovsky,
New Cases of Almost Periodic
Factorization of Triangular Matrix Functions, Michigan Mathematical Journal 45 (1), April 1998