Uniform Price Auction and Fixed Price Offerings in IPO: An Experimental Comparison

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

No 2005-20, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We compare the performances of uniform price auctions with fixed price offerings using laboratory experiments. In the uniform treatment, there is no evidence that the tacit collusion equilibrium has been achieved. On the contrary, subjects with higher expected value bid more aggressively. Their behaviour is close to an equilibrium derived where all players participate. The resulting market prices are significantly higher than the market value of a bidder with a low value signal. As a consequence, in our experiment uniform price auctions are superior to fixed price offerings in terms of revenue raising.

Keywords: experiment; IPO; uniform price auction; fixed price offering; multi-unit demand; divisible goods (search for similar items in EconPapers)
JEL-codes: C91 D44 G12 (search for similar items in EconPapers)
Date: 2005-10
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2005-20

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