Advances in pay-as-bid auctions

Advances in pay-as-bid auctions

This gives a novel explanation for the ambiguity of empirical results surrounding mechanism selection. If sellers expend as much resources optimising within a mechanism because they do choosing which mechanism to implement, empiricists should witness roughly the same outcomes whichever of the pay-as-bid or uniform-price auctions is implemented.

Concluding remarks

Understanding bidder behaviour in divisible-good pay-as-bid auctions is very important to the debate over which of the pay-as-bid or uniform-price auctions ought to be implemented used, and these auction formats are accustomed to allocate trillions of dollars of goods annually. Realizing that equilibrium actions are well-defined, and they may have a tractable closed-form representation shows that structural empirical studies of auctions can correctly infer unobserved outcomes of the pay-as-bid auction. The recent work discussed above presents a rich group of results that may empower policy decisions in valuable markets.


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Ausubel, L, P Cramton, M Pycia, M Rostek, and M Weretka (2014), “Demand reduction and inefficiency in multi-unit auctions”, Overview of Economic Studies.

Brenner, M, D Galai, and O Sade (2009), “Sovereign debt auctions: Uniform or discriminatory?”, Journal of Monetary Economics.

S Castellanos and M Oviedo (2004), “Optimal bidding in the Mexican treasury securities primary auctions: Results from a structural economics approach”, Mimeo.

Federico G and D Rahman (2003), “Bidding within an electricity pay-as-bid auction”, Journal of Regulatory Economics.

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Holmberg, P (2009), “Supply function equilibria of pay-as-bid auctions”, Journal of Regulatory Economics.

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Woodward, K (2014), “Strategic ironing in pay-as-bid auctions”, Mimeo.

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