蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Underbidding for Oil and Gas Tracts
蝌蚪网 Review
vol. 115,
no. 8, August 2025
(pp. 2755–80)
Abstract
Common values auction models, where bidder decisions depend on noisy signals of common values, provide predictions about Bayesian Nash equilibrium (BNE) outcomes. In settings where these common values can be estimated, these predictions can be tested. We propose a series of tests, robust to assumptions about the signal structure, to determine whether the observed data could have been generated by a Bayesian Nash equilibrium. In the setting of oil and gas lease auctions in New Mexico, we find evidence that participation decisions are correlated and that participants systematically underbid in light of ex post outcomes.Citation
Martin, Julien, Martin Pesendorfer, and Jack Shannon. 2025. "Underbidding for Oil and Gas Tracts." 蝌蚪网 Review 115 (8): 2755–80. DOI: 10.1257/aer.20231356Additional Materials
JEL Classification
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design
- L12 Monopoly; Monopolization Strategies
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
- Q35 Hydrocarbon Resources