Credit auctions and bid caps

David Lagziel

doi:10.1016/j.geb.2018.10.010

Credit auctions and bid caps

David Lagziel

Department of Economics

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

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 language	English
Pages (from-to)	416-422
Number of pages	7
Journal	Games and Economic Behavior
Volume	113
DOIs	https://doi.org/10.1016/j.geb.2018.10.010
State	Published - 1 Jan 2019

Keywords

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

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.geb.2018.10.010

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AB - 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).

KW - Bid-caps

KW - Credit auctions

KW - Defaulting

KW - First-price auctions

KW - Second-price auctions

UR - http://www.scopus.com/inward/record.url?scp=85056597874&partnerID=8YFLogxK

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DO - 10.1016/j.geb.2018.10.010

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VL - 113

SP - 416

EP - 422

JO - Games and Economic Behavior

JF - Games and Economic Behavior

ER -

Credit auctions and bid caps

Abstract

Keywords

ASJC Scopus subject areas

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