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Mechanism Choice and Strategic Bidding in Divisible Good Auctions: An Empirical Analysis of the Turkish Treasury Auction Market

Listed author(s):
  • Ali Hortaçsu
  • David McAdams

We propose an estimation method to bound bidders' marginal valuations in discriminatory auctions using individual bid-level data and apply the method to data from the Turkish Treasury auction market. Using estimated bounds on marginal values, we compute an upper bound on the inefficiency of realized allocations as well as bounds on how much additional revenue could have been realized in a counterfactual uniform price or Vickrey auction. We conclude that switching from a discriminatory auction to a uniform price or Vickrey auction would not significantly increase revenue. Moreover, such a switch would increase bidder expected surplus by at most 0.02 percent.

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File URL: http://dx.doi.org/10.1086/657948
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/657948
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 118 (2010)
Issue (Month): 5 ()
Pages: 833-865

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Handle: RePEc:ucp:jpolec:doi:10.1086/657948
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. Robert Wilson, 1979. "Auctions of Shares," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 675-689.
  2. Philip A. Haile, 2001. "Auctions with Resale Markets: An Application to U.S. Forest Service Timber Sales," American Economic Review, American Economic Association, vol. 91(3), pages 399-427, June.
  3. Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Review of Economic Studies, Oxford University Press, vol. 81(4), pages 1366-1400.
  4. Bernard Elyakime & Jean-Jacques Laffont & Patrice Loisel & Quang Vuong, 1994. "First-Price Sealed-Bid Auctions with Secret Reservation Prices," Annals of Economics and Statistics, GENES, issue 34, pages 71-114.
  5. Boo-Sung Kang & Steven L. Puller, 2008. "THE EFFECT OF AUCTION FORMAT ON EFFICIENCY AND REVENUE IN DIVISIBLE GOODS AUCTIONS: A TEST USING KOREAN TREASURY AUCTIONS -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 290-332, 06.
  6. Umlauf, Steven R., 1993. "An empirical study of the Mexican Treasury bill auction," Journal of Financial Economics, Elsevier, vol. 33(3), pages 313-340, June.
  7. Ali Hortacsu & Samita Sareen, 2004. "Order Flow and the Formation of Dealer Bids in Treasury Auctions," 2004 Meeting Papers 50, Society for Economic Dynamics.
  8. Matthew Shum, 2000. "Nonparametric Tests for Common Values," Econometric Society World Congress 2000 Contributed Papers 1598, Econometric Society.
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