Selling shares to retail investors: auction vs. fixed price

Bierbaum J, Grimm V (2006)

Publication Type: Journal article

Publication year: 2006

Journal

Review of Economic Design Springer Verlag (Germany)

Publisher: Springer Verlag (Germany)

Book Volume: 10

Pages Range: 85-112

Journal Issue: 2

URI: http://www.springerlink.com/content/p72x001341w21508/

DOI: 10.1007/s10058-006-0007-y

Abstract

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.

Authors with CRIS profile

Veronika Grimm Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie

How to cite

APA:

Bierbaum, J., & Grimm, V. (2006). Selling shares to retail investors: auction vs. fixed price. Review of Economic Design, 10(2), 85-112. https://dx.doi.org/10.1007/s10058-006-0007-y

MLA:

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

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