Bidding with Securities: Auctions and Security Design
نویسندگان
چکیده
We study security-bid auctions in which bidders compete for an asset by bidding with securities whose payments are contingent on the asset’s realized value. In formal security-bid auctions, the seller restricts the security design to an ordered set and uses a standard auction format (e.g., first or secondprice). In informal settings, bidders offer arbitrary securities and the seller chooses the most attractive bid, based on his beliefs, ex-post. We characterize equilibrium and show that steeper securities yield higher revenues, that auction formats can be ranked based on the security design, and that informal auctions lead to the lowest possible revenues. (JEL ...)
منابع مشابه
Bidding With Securities: Comment
Peter DeMarzo, Ilan Kremer and Andrzej Skrzypacz (2005, henceforth DKS) analyzed auctions in which bidders compete in securities. They show that a steeper security leads to a higher expected revenue for the seller, and also use this to establish the revenue ranking between standard auctions. In this comment, we obtain the opposite results to DKS’s by assuming that a higher return requires a hig...
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