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Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue

Author

Listed:
  • Robert A. Feldman

    (International Monetary Fund)

  • Vincent Reinhart

    (International Monetary Fund)

Abstract

This paper evaluates the importance of auction format on bidding behavior and seller revenue, focusing on differences in performance under uniform-price and discriminatory-price formats. The analysis is based on a standard benchmark model from which empirically testable hypotheses are derived on the optimal amount of bid shading that generates revenue equivalence between the two formats. Applying this model to data from the IMF gold auctions run in 1976-80, we find evidence of statistically significant shading in excess of the theoretically derived optimum under the discriminatory format. This evidence suggests greater seller revenue under the uniform-price format.

Suggested Citation

  • Robert A. Feldman & Vincent Reinhart, 1996. "Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue," IMF Staff Papers, Palgrave Macmillan, vol. 43(2), pages 395-418, June.
  • Handle: RePEc:pal:imfstp:v:43:y:1996:i:2:p:395-418
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    Cited by:

    1. Osório-Peters, Suhita, 1998. "Die Reform der EU-Marktordnung für Bananen: Lösungsansätze eines fairen Handels unter Berücksichtigung der Interessen von Kleinproduzenten," ZEW Dokumentationen 98-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Walter Orellana Rocha & Bernardo X. Fernández Tellería & Vladimir Fernández Quiroga, 2006. "Subasta electrónica interactiva y subasta a sobre cerrado: Un análisis comparativo de los resultados en Bolivia," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 9(1), pages 65-113, December.
    3. Sara Castellanos, 2001. "Mexican treasury securities primary auctions," Theory workshop papers 357966000000000025, UCLA Department of Economics.
    4. Osório-Peters, Suhita, 1998. "The goals of sustainable development and the reform of the EU banana trade regime: a discussion of different trade instruments," ZEW Discussion Papers 98-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Rodolfo Guerrero & José Luis Negrín, 2006. "Eficiencia del sistema bancario mexicano 1997-2004: una estimación dinámica," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 235-259, julio-sep.
    6. repec:bla:scotjp:v:64:y:2017:i:5:p:483-500 is not listed on IDEAS
    7. Sara Castellanos, 2001. "A New Empirical Study of the Mexican Treasury Securities Primary Auctions: Is there more underpricing?," Levine's Working Paper Archive 625018000000000206, David K. Levine.
    8. Paul Castillo & Carlos Montoro & Vicente Tuesta, 2006. "Estimación de la tasa natural de interés para la economía peruana," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 261-298, julio-sep.

    More about this item

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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