Document Type
Report
Source Publication Title
Technical Report 128
Abstract
The competitive sealed bids on an individual offshore oil and gas lease are often assumed to follow a lognormal distribution (Brown, 1969). However, under the lognormality assumption there are known discrepancies between observed and theoretical results. Accordingly, alternative lease bid distributions have been studied. In particular, Dyer (1980) has shown that one would not reject the hypothesis that the bids on certain groups of leases follow Weibull distributions. In this paper, we discuss test procedures for discriminating between a lognormal distribution and a Weibull distribution. The procedure is then applied to the group of 12-, 13-, 14-, 15-, and 16-bid leases. The hypothesis that the bids follow lognormal distributions as opposed to Weibull distributions is overwhelmingly rejected. On the other hand, the hypothesis that the bids follow Weibull distributions as opposed to lognormal distributions is not rejected.
Disciplines
Mathematics | Physical Sciences and Mathematics
Publication Date
5-1-1980
Language
English
License
This work is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 4.0 International License.
Recommended Citation
Dyer, Danny D., "On the Discrimination Between the Lognormal and the Weibull Distributions With Applications to Offshore Oil/Gas Lease Bids" (1980). Mathematics Technical Papers. 201.
https://mavmatrix.uta.edu/math_technicalpapers/201