Replication data for: A Procurement Auction for Toxic Assets with Asymmetric Information

Principal Investigator(s): View help for Principal Investigator(s) Olivier Armantier; Charles A. Holt; Charles R. Plott

Version: View help for Version V1

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Project Citation:

Armantier, Olivier, Holt, Charles A., and Plott, Charles R. Replication data for: A Procurement Auction for Toxic Assets with Asymmetric Information. Nashville, TN: American Economic Association [publisher], 2013. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114411V1

Project Description

Summary: The proposed 2008 TARP auction was intended to remove "toxic" assets from portfolios of financially stressed banks. The Treasury selected a design whereby bids to sell different securities would be normalized by "reference prices" that reflect relative value estimates. We conduct a series of experiments indicating that a simple Reference Price Auction can be an effective mechanism for avoiding serious effects of adverse selection and strategic bid manipulation, even with inaccurate reference prices. Beyond the TARP auction, our results are relevant to various multi-object auctions with value heterogeneity.

Scope of Project

JEL Classification:
      D44 Auctions
      D82 Asymmetric and Private Information; Mechanism Design
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages

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V1 [2019-10-12]

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