Review of Financial Studies Vol. 6 No. 4 1993
Auctions of Divisible Goods: On the Rationale for the Treasury Experiment
Abstract
We compare a sealed-bid uniform-price auction (the Treasury’s experimental format) with a sealed-bid discriminatory auction (the Treasury’s format heretofore), assuming the good is perfectly divisible. We show that the auction theory that prompted the experiment, which assumes single-unit demands, does not adequately describe the bidding game for Treasury securities. Collusive strategies are self-enforcing in uniform-price divisible-good auctions. In these equilibria, the seller’s expected revenue is lower than in equilibria of discriminatory auctions.
- DOI
- 10.1093/rfs/6.4.733
- Volume
- 6
- Issue
- 4
- Pages
- 733-764
- Language
- en
- Sources
- crossref openalex