IMF Working Papers

Auction Format Matters: Evidenceon Bidding Behavior and Seller Revenue

By Robert A Feldman, Vincent Reinhart

May 1, 1995

Preview Citation

Format: Chicago

Robert A Feldman, and Vincent Reinhart. Auction Format Matters: Evidenceon Bidding Behavior and Seller Revenue, (USA: International Monetary Fund, 1995) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper evaluates the importance of auction format on bidding behavior and seller revenue, focusing on differences in performance under uniform-price and discriminatory-price formats. The analysis is based on a standard benchmark model from which empirically-testable hypotheses are derived on the optimal amount of bid shading that generates revenue equivalence between the two formats. Applying this model to data from the IMF gold auctions run in 1976-80, we find evidence of statistically significant shading in excess of the theoretically-derived optimum under the discriminatory format. This evidence suggests greater seller revenue under the uniform-price format.

Subject: Commodities, Commodity markets, Financial markets, Gold, Gold prices, Prices

Keywords: Auction format, Central and Eastern Europe, Commodity markets, Discriminating-price auction, Discriminatory-price auction, Gold, Gold prices, Price, Uniform-price auction, Uniform-price format, WP

Publication Details

  • Pages:

    30

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1995/047

  • Stock No:

    WPIEA0471995

  • ISBN:

    9781451846607

  • ISSN:

    1018-5941

Notes

Also published in Staff Papers, Vol. 43, No. 2, June 1996.

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