The Spanish Auction for Government Securities: A Laboratory Analysis

Klaus Abbink, Jordi Brandts and Paul Pezanis-Christou

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: Updated - please see paper 551.02 in this series. The Bank of Spain uses a unique auction format to sell government bonds, which can be seen as a hybrid of a uniform and a discriminatory auction. For winning bids above the average winning bid, buyers are charged the average winning bid, otherwise they pay their respective bids. We report an experiment that compares this auc-tion format to the discriminatory format used in most other countries. We use a common value model with multi-unit supply and two-unit demand. The results show significantly higher revenue with the Spanish format, while volatility of prices over time is lower with the discriminatory format. Our data also exhibit the use of bid-spreading strategies.

Keywords: Treasury; Spanish auctions; discriminatory auctions; multi-unit demand; common values; experimental econom-ics (search for similar items in EconPapers)
JEL-codes: C92 D44 E42 E58 H63 (search for similar items in EconPapers)
Pages: 15
Date: 2001-03-01
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:482.02

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