The Price/Quantity Sealed Bid/Offer Auction with Pro-rata Rationing: Experimental Evidence

Dickhaut, John, et al
Authors registered in the RePEc Author Service: John Dickhaut

Economic Journal, 1993, vol. 103, issue 418, 547-69

Abstract: This study examines a price/quantity sealed bid/offer auction with pro-rata rationing in risky and riskless settings. An asset with a known distribution of possible values is traded in the risky setting. Results include prices and quantities less consistent with the competitive equilibrium than with other Nash equilibria; frequent overrevelation of quantities; a 0.73 correlation between inferred and induced risk coefficients; lower forgone profits for the nonrationed side of the market; and relatively low efficiencies. The riskless setting, in which asset values are known, exhibits many of the same characteristics but to a lesser degree. Coauthors are Ann Martin, David Senkow, and Galen Sevcik. Copyright 1993 by Royal Economic Society.

Date: 1993
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