Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/59657
Authors: 
De Castro, Luciano I.
Year of Publication: 
2010
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1530
Abstract: 
Affiliation has been a prominent assumption in the study of economic models with statistical dependence. Despite its large number of applications, especially in auction theory, affiliation has limitations that are important to be aware of. This paper shows that affiliation is a restrictive condition and the intuition usually given for its adoption may be misleading. Also, other usual justifications for affiliation are not compelling. Moreover, some implications of affiliation - namely, equilibrium existence in first-price auctions and the revenue dominance of second-price auctions - do not generalize to other definitions of positive dependence.
Subjects: 
affiliation
positive dependence
statistical dependence of types
conditional independence
de Finetti's theorem
minimally informative random variable
auctions
pure strategy equilibrium
revenue ranking
JEL: 
C62
C72
D44
D82
Document Type: 
Working Paper

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