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Uniform price auctions and fixed price offerings in IPOs: an experimental comparison

Published online by Cambridge University Press:  14 March 2025

Ping Zhang
Ping Zhang*
Affiliation:
School of Economics, University of Nottingham, Nottingham NG7 2RD, UK
*
e-mail: [email protected]
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Abstract

We compare uniform price auctions with fixed price offerings in Initial Public Offerings (IPO) using laboratory experiments. The experimental environment is based on the Biais and Faugeron-Grouzet (J. Financ. Intermed. 11:9-36, 2002) model. Standard predictions based on tacit collusion equilibria (TCE) suggest lower revenues in uniform price auctions, although alternative equilibria allow for higher revenues. In our experiment, there is no evidence that TCE are played. The experiment suggests that the uniform price auctions are superior to fixed price offerings in terms of raising revenues.

Keywords

ExperimentIPOUniform price auctionFixed price offeringShare auction

JEL classification

D44: Auctions G12: Asset Pricing • Trading Volume • Bond Interest Rates C91: Laboratory, Individual Behavior
Type
Research Article
Information
Experimental Economics , Volume 12 , Issue 2 , June 2009 , pp. 202 - 219
Copyright
Copyright © Economic Science Association 2008

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Footnotes

Electronic supplementary material The online version of this article (http://dx.doi.org/10.1007/s10683-008-9210-8) contains supplementary material, which is available to authorized users.

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