Discriminatory versus uniform-price auctions

Arbeitspapier

The purpose of this paper is to compare the two auction techniques (discriminatory and uniform-price auctions) most commonly used for the sale of securities. Literature tends to analyze methods from the aspect of the expected revenue from the auction. Theoretical models arrive at different rankings for expected revenue; however, they do reveal the relationship between the bids submitted and the auction technique. These results are confirmed both by 'laborator' experiments and the empirical evidence of real-world auctions. The latter may also provide a robust answer to the question of expected revenue; the uniform-price format coming out as the more beneficial for the Treasury. Still, at present the global majority of issuers of government bonds use the discriminatory-price format and central bank instruments also tend to be sold in this format. This is because issuers may have considerations other than expected revenue.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: MNB Occasional Papers ; No. 111

Classification and Topics

• Classification: Wirtschaft ; Bargaining Theory; Matching Theory ; Auctions ; General Equilibrium and Disequilibrium: Financial Markets ; Asymmetric and Private Information; Mechanism Design ; National Debt; Debt Management; Sovereign Debt
• Subject: auction ; central bank auctions ; treasury auctions ; discriminatory auctions ; uniform-price auctions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Monostori, Zoltán
• Event: Veröffentlichung
• (who): Magyar Nemzeti Bank
• (where): Budapest
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/141995
• Last update: 10.03.2025, 11:42 AM CET