IDEAS home Printed from
   My bibliography  Save this paper

Multiple Bids in a Multiple-Unit Common Value Auction


  • Michael B. Gordy

    () (Board of Governors of the Federal Reserve System, Washington)


In auctions of government treasury securities, each bidder is permitted to enter multiple price-quantity bids. Gordy (1996) finds empirical evidence from Portugal's treasury bill auctions that multiple bidding is used more intensively as the potential for winner's curse increases. That is, ceteris paribus, a bidder submits a larger number of bids and spreads these bids more widely, the greater is the expected number of competing bidders and the degree of uncertainty in the market. It is conjectured in that paper that multiple bids can be used to hedge against winner's curse, as well as to express downward sloping demand due to risk aversion. This paper provides theoretical support for these conjectures. Direct generalization of Milgrom and Weber (1982) to the multiple-unit, multiple bid case appears to be technically intractable. Heretofore, the theoretical study of multiple bid auctions has followed Wilson (1979), in which each bidder is assumed to submit a continuous demand schedule. Although elegant, Wilson's model remains poorly understood. It has been solved only for a small number of special distributional assumptions, and appears to give rise to multiple equilibria. Furthermore, bidders in the real world typically submit only a small number of bids, so assuming continuity may be as unrealistic as assuming a single bid per bidder. In the Portuguese sample, for example, the median number of bids per bidder is three.

Suggested Citation

  • Michael B. Gordy, "undated". "Multiple Bids in a Multiple-Unit Common Value Auction," Computing in Economics and Finance 1996 _021, Society for Computational Economics.
  • Handle: RePEc:sce:scecf6:_021

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
    2. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
    3. Michael B. Gordy, 1999. "Hedging Winner'S Curse With Multiple Bids: Evidence From The Portuguese Treasury Bill Auction," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 448-465, August.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Abbink, Klaus & Brandts, Jordi & Pezanis-Christou, Paul, 2006. "Auctions for government securities: A laboratory comparison of uniform, discriminatory and Spanish designs," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 284-303, October.
    2. Hoidal Bjonnes, Geir, 2001. "Winner's Curse in Discriminatory Price Auctions: Evidence from the Norwegian Treasury Bill Auctions," SIFR Research Report Series 3, Institute for Financial Research.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecf6:_021. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.