Uniform price auctions and fixed price offerings in IPOs: an experimental comparison
We compare the performances of uniform price auctions with fixed price offerings using laboratory experiments. In the uniform treatment, there is no evidence that the tacit collusion equilibria, which predict symmetric behaviors among bidders, have been achieved. On the contrary, in accordance with another set of equilibria, subjects with higher expected value bid more aggressively and obtain a higher allocation. The resulting market price increases with the market value and is significantly higher than the expected value of a bidder with a low value signal. As a consequence, our experiment suggests that the uniform price auctions are superior to fixed price offerings in terms of raising revenues.
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