Credit auctions and bid caps

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


In this paper we offer two contributions to the field of credit auctions. First, we compare first- and second-price credit auctions and provide solvency-dependent conditions such that one mechanism dominates the other in terms of expected payoffs of all the parties involved. In addition, we present a new possibility of using bid caps in credit auctions. We study the equilibria in the capped mechanisms and show that bid caps can increase the seller's expected payoff and, in some cases, the expected payoffs of all sides (a win–win situation).

Original languageEnglish
Pages (from-to)416-422
Number of pages7
JournalGames and Economic Behavior
StatePublished - 1 Jan 2019


  • Bid-caps
  • Credit auctions
  • Defaulting
  • First-price auctions
  • Second-price auctions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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