English, Article, Journal or magazine article edition: Common-Value Auctions with Liquidity Needs: An Experimental Test of a Troubled Assets Reverse Auction Lawrence M. Ausubel; Peter Cramton; Emel Filiz-Ozbay; ...

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Bookmark: http://trove.nla.gov.au/version/106419
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Common-Value Auctions with Liquidity Needs: An Experimental Test of a Troubled Assets Reverse Auction
Author
  • Lawrence M. Ausubel
  • Peter Cramton
  • Emel Filiz-Ozbay
  • Nathaniel Higgins
  • Erkut Ozbay
  • Andrew Stocking
Physical Description
  • preprint
Notes
  • We experimentally test alternative auction designs suitable for pricing and removing troubled assets from banks’ balance sheets as part of the financial rescue. Many individual securities or pools of securities are auctioned simultaneously. Securities that are widely held are purchased in auctions for individual securities. Securities with concentrated ownership are purchased as pools of related securities. Each bank has private information about its liquidity need and the true common value of each security. We study bidding behavior and performance of sealed-bid uniform-price auctions and dynamic clock auctions. The clock and sealed-bid auctions resulted in similar prices. However, the clock auctions resulted in substantially higher bank payoffs, since the dynamic auction enabled the banks to better manage their liquidity needs. The clock auctions also reduced bidder error. The experiments demonstrated the feasibility of quickly implementing simple and effective auction designs to help resolve the crisis.
  • Auctions, financial auctions, financial crisis
  • RePEc:pcc:pccumd:09cvawln
Language
  • English
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