Anglo-Dutch premium auctions in eighteenth-century Amsterdam
This paper studies Anglo-Dutch premium auctions used in the secondary market for financial securities in eighteenth-century Amsterdam, Europe's financial capital at the time. 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 regardless of the second-round outcome. To rationalize the introduction and continued use of this auction format, we need to determine whether bidding behavior was consistent with equilibrium play. We model this auction format theoretically, and show that the likelihood of a bid in the second round should be higher when there is greater uncertainty about the value of the security being sold. We then test this prediction on data from 16,854 securities sold at auction on 469 days over an 18-year period in the late 1700s; using several different proxies for the uncertainty of a given security's value, we find support for this theoretical prediction.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (030) 838 2272
Fax: (030) 838 2129
Web page: http://www.wiwiss.fu-berlin.de/en/index.htmlEmail:
More information through EDIRC
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.:
- Roth, Alvin, 2008.
"What Have We Learned from Market Design?,"
2579650, Harvard University Department of Economics.
- Alvin E. Roth, 2009. "What Have We Learned from Market Design?," Innovation Policy and the Economy, University of Chicago Press, vol. 9(1), pages 79 - 112.
- AlvinE. Roth, 2008. "What Have We Learned from Market Design?," Economic Journal, Royal Economic Society, vol. 118(527), pages 285-310, 03.
- Alvin E. Roth, 2009. "What Have We Learned from Market Design?," NBER Chapters, in: Innovation Policy and the Economy, Volume 9, pages 79-112 National Bureau of Economic Research, Inc.
- Alvin E. Roth, 2008. "What Have We Learned from Market Design?," Innovations: Technology, Governance, Globalization, MIT Press, vol. 3(1), pages 119-147, January.
- Börner, Lars & Hatfield, John William, 2010. "The economics of debt clearing mechanisms," Discussion Papers 2010/27, Free University Berlin, School of Business & Economics.
- Börner, Lars & Quint, Daniel, 2010. "Medieval matching markets," Discussion Papers 2010/31, Free University Berlin, School of Business & Economics.
- 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.
- 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.
- Helmuts Azacis & Roberto Burguet, 2005. "Incumbency and Entry in Licence Auctions: The Anglo-Dutch Auctions Meets other Simple Alternatives," Working Papers 223, Barcelona Graduate School of Economics.
- Azacis, Helmuts & Burguet, Roberto, 2005. "Incumbency and Entry in License Auctions: The Anglo-Dutch Auction Meets Other Simple Alternatives," Cardiff Economics Working Papers E2005/11, Cardiff University, Cardiff Business School, Economics Section.
- Ann M. Carlos & Larry Neal, 2011.
"Amsterdam and London as financial centers in the eighteenth century,"
LSE Research Online Documents on Economics
38799, London School of Economics and Political Science, LSE Library.
- 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.
- Paul Klemperer, 2004.
"Auctions: Theory and Practice,"
2004-W09, Economics Group, Nuffield College, University of Oxford.
When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:20123. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.