Security auctions with cash- and equity-bids: An experimental study

Elnaz Bajoori, Ronald Peeters and Leonard Wolk

European Economic Review, 2024, vol. 163, issue C

Abstract: We study the performance of cash- and equity-bid security auctions in an experiment using first- and second-price pricing rules. Theory predicts revenue equivalence between first- and second-price formats, equity auctions to generate more revenue than cash auctions, and for all formats to be efficient. We find that, on average, the first-price equity auction produces higher revenues than the other formats. However, relative to equilibrium, equity auctions perform worse than cash auctions. Furthermore, all formats display deviations from ex ante efficiency, yet these deviations are not statistically distinguishable from one another.

Keywords: Equity auctions; Security auctions; Bidding behavior; Revenue; Efficiency (search for similar items in EconPapers)
JEL-codes: C91 D44 G32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:163:y:2024:i:c:s001429212400031x

DOI: 10.1016/j.euroecorev.2024.104702

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