Selling shares to retail investors: auction vs. fixed price

Journal article

Publication Details

Author(s): Bierbaum J, Grimm V
Journal: Review of Economic Design
Publisher: Springer Verlag (Germany)
Publication year: 2006
Volume: 10
Journal issue: 2
Pages range: 85-112
ISSN: 1434-4742


We analyze the problem of selling shares of a divisible good to a large number of buyers when demand is uncertain. We characterize equilibria of two popular mechanisms, a fixed price mechanism and a uniform price auction, and compare the revenues. While in the auction truthful bidding is a dominant strategy, we find that bidders have an incentive to overstate their demand in the fixed price mechanism. For some parameter values we find that the fixed price mechanism outperforms the auction.

FAU Authors / FAU Editors

Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie

How to cite

Bierbaum, J., & Grimm, V. (2006). Selling shares to retail investors: auction vs. fixed price. Review of Economic Design, 10(2), 85-112.

Bierbaum, Jürgen, and Veronika Grimm. "Selling shares to retail investors: auction vs. fixed price." Review of Economic Design 10.2 (2006): 85-112.


Last updated on 2018-14-07 at 18:10