Uniform Price Auctions and Fixed Price Offerings in IPOs: An Experimental Comparison

Ping Zhang ()
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Ping Zhang: School of Economics, University of Nottingham

No 2008-05, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We compare uniform price auctions with fixed price offerings in Initial Public Offerings (IPO) using laboratory experiments. The experimental environment is based on the Biais and Faugeron-Grouzet (2002) model. Standard predictions based on tacit collusion equilibria (TCE) suggest lower revenues in uniform price auctions, although alternative equilibria allow for higher revenues. In our experiment, there is no evidence that TCE are played. The experiment suggests that the uniform price auctions are superior to fixed price offerings in terms of raising revenues.

Keywords: Experiment; IPO; Uniform price auction; Fixed price offering; Share auction (search for similar items in EconPapers)
JEL-codes: C91 D44 G12 (search for similar items in EconPapers)
Date: 2008-04
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2008-05

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