Bidding and Drilling under Uncertainty: An Empirical Analysis of Contingent Payment Auctions

• 成果类型: Article; Early Access
• 署名作者: Bhattacharya, Vivek; Ordin, Andrey; Roberts, James W.
• 署名单位: Northwestern University; University of Texas System; University of Texas Austin; Duke University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/718916
• 发表日期: 2022
• 关键词: 1ST-PRICE; PARTICIPATION; INFORMATION; COMPETITION; securities; entry; curse

摘要

Auctions are often used to sell assets whose future cash flows require the winner to make postauction investments. When winners' payments are contingent on these cash flows, auction design can influence both bidding and incentives to exert effort after the auction. We propose a model of contingent payment auctions that links auction design to postauction economic activity. In the context of oil leases in the Permian Basin, we show that moral hazard affects the relative revenue ranking of different auction designs. Among a large class of alternatives, the observed design cannot be changed to increase both revenues and drilling rates.