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Auction Format Matters: Evidenceon Bidding Behavior and Seller Revenue

Author

Listed:
  • Mr. Robert A Feldman
  • Mr. Vincent Reinhart

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

  • Mr. Robert A Feldman & Mr. Vincent Reinhart, 1995. "Auction Format Matters: Evidenceon Bidding Behavior and Seller Revenue," IMF Working Papers 1995/047, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/047
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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 - Leibniz Centre for European Economic Research.
    2. Sara Castellanos, 2001. "Mexican treasury securities primary auctions," Theory workshop papers 357966000000000025, UCLA Department of Economics.
    3. 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 - Leibniz Centre for European Economic Research.
    4. 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.

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