Identification of incomplete information allocation-transfer games in monotone equilibrium

Abstract

This paper develops identification results for the distribution of valuations in a class of allocation-transfer games. These games determine an allocation of units of a valuable object and arrangement of monetary transfers on the basis of the actions taken by the players. The results allow dependent valuations, discrete parts of the action space, non-smoothness, and unknown (to the econometrician, prior to observing the data) details of how the allocations and transfers are determined. The identification strategy is based on the assumption of a single monotone equilibrium used in the data, in which players use strategies that are weakly increasing functions of their valuations for the object being allocated. As extensions, the identification strategy accommodates certain relaxations of the equilibrium assumption, while maintaining the assumption of the use of monotone strategies.