European Central Bank Operations: Experimental Investigation of Variable Rate Tenders

Karl-Martin Ehrhart ()
Additional contact information
Karl-Martin Ehrhart: Universitaet Karlsruhe, Postal: RZ Zirkel 2 D-76128 Karlsruhe

No 01-37, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: In an experimental study auction procedures of variable rate tenders, which are prevalent in practice, the discriminatory American auction and the competitive Dutch auction, are investigated on a repeated basis. At the center of this study stands the comparison of the two auction formats with respect to true bidding, efficiency, seller's revenue and bidders' payoffs. We observe bid shading in both auction formats and a higher level of underbidding in the American auctions than in the Dutch auctions. Furthermore, subjects understate their willingness to pay more and more in the course of time in the American auction. As a result seller's revenue decreases and bidders' payoffs increase. However, the experimental results neither favor the American nor the Dutch auction format, in terms of revenue. Moreover, no differences are found with respect to efficiency. The outcomes of both auction formats are inefficient. However, the level of efficiency increases over time in the auctions.

Pages: 27 pages
Date: 2001-04-15
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
References: Add references at CitEc
Citations: View citations in EconPapers (10)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:xrs:sfbmaa:01-37

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim Contact information at EDIRC., Sonderforschungsbereich 504, University of Mannheim
Bibliographic data for series maintained by Carsten Schmidt ( this e-mail address is bad, please contact ).