Publication or External Link
Ausubel, Lawrence M.
"Auctioning Securities," (with Lawrence M. Ausubel) Working Paper, University of Maryland, March 1998.
Treasury debt and other divisible securities are traditionally sold in either a pay-your-bid(discriminatory) auction or a uniform-price auction. We compare these auction formats with a Vickrey auction and also with two ascending-bid auctions. The Vickrey auction and the alternative ascending-bid auction (Ausubel 1997) have important theoretical advantages for sellers. In a setting without private information, these auctions achieve the maximal revenue as a unique equilibrium in dominant strategies. In contrast, the pay your-bid, uniform-price, and standard ascending-bid auction admit a multiplicity of equilibria that yield low revenues for the seller. We show how these results extend to a setting where bidders have affiliated private information. Our results question the standard ways that securities are offered to the public.