Advanced Search
MyIDEAS: Login

Anglo-Dutch premium auctions in eighteenth-century Amsterdam

Contents:

Author Info

  • Boerner, Lars
  • van Bochove, Christiaan
  • Quint, Daniel

Abstract

An Anglo-Dutch premium auction consists of an English auction followed by a Dutch auction, with a cash premium paid to the winner of the first round. We study such auctions used in the secondary debt market in eighteenth-century Amsterdam. This was among the first uses of auctions, or any structured market-clearing mechanism, in a financial market. We find that this market presented two distinct challenges - generating competition and aggregating information. We argue that the Anglo-Dutch premium auction is particularly well-suited to do both. Modeling equilibrium play theoretically, we predict a positive relationship between the uncertainty in a security's value and the likelihood of a second-round bid. Analyzing data on 16,854 securities sold in the late 1700s, we find empirical support for this prediction. This suggests that bidding behavior may have been consistent with (non-cooperative) equilibrium play, and therefore that these auctions were successful at generating competition. We also find evidence suggesting that these auctions succeeded at aggregating information. Thus, the Anglo-Dutch premium auction appears to have been an effective solution to a complex early market design problem.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://eprints.lse.ac.uk/47465/1/__libfile_REPOSITORY_Content_Boerner_Anglo-Dutch%20premium%20auctions%20in%20eighteenth-century%20Amsterdam_Anglo-Dutch%20premium%20auctions%20in%20eighteenth-century%20Amsterdam%20%28LSE%20RO%29.pdf
Download Restriction: no

Bibliographic Info

Paper provided by London School of Economics and Political Science in its series Open Access publications from London School of Economics and Political Science with number http://eprints.lse.ac.uk/47465/.

as in new window
Length:
Date of creation: 22 Nov 2012
Date of revision:
Handle: RePEc:ner:lselon:http://eprints.lse.ac.uk/47465/

Contact details of provider:
Web page: http://www.lse.ac.uk

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Roth, Alvin, 2008. "What Have We Learned from Market Design?," Scholarly Articles 2579650, Harvard University Department of Economics.
  2. Börner, Lars & Quint, Daniel, 2010. "Medieval matching markets," Discussion Papers 2010/31, Free University Berlin, School of Business & Economics.
  3. De Marchi, Neil, 1995. "The role of Dutch auctions and lotteries in shaping the art market(s) of 17th century Holland," Journal of Economic Behavior & Organization, Elsevier, vol. 28(2), pages 203-221, October.
  4. Azacis, Helmuts & Burguet, Roberto, 2008. "Incumbency and entry in license auctions: The Anglo-Dutch auction meets another simple alternative," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 730-745, May.
  5. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Series Working Papers 2004-W09, University of Oxford, Department of Economics.
  6. Carlos, Ann M. & Neal, Larry, 2011. "Amsterdam and London as financial centers in the eighteenth century," Financial History Review, Cambridge University Press, vol. 18(01), pages 21-46, April.
  7. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Papers 2004-W09, Economics Group, Nuffield College, University of Oxford.
  8. Börner, Lars & Hatfield, John William, 2010. "The economics of debt clearing mechanisms," Discussion Papers 2010/27, Free University Berlin, School of Business & Economics.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ner:lselon:http://eprints.lse.ac.uk/47465/

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LSE Research Online).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.