COME ON IN, THE WATER'S FINE! AN EXPERIMENTAL EXAMINATION OF HYBRID IPO AUCTIONS WITH A PUBLIC POOL

摘要

We offer experimental and theoretical evidence that auction methods for initial public offerings (IPOs) in the United States may be improved through hybrids that include a separate retail tranche or "public pool." The multi-unit uniform price auctions in our laboratory experiments incorporate key IPO features including endogenous entry, costly information acquisition, and differing capacity constraints. As predicted, hybrids increase proceeds and reduce price volatility, price error, and the incentive for small bidders to free ride. Underpricing occurs in both treatments but is attenuated with the public pool. Our results imply that both IPO auctions and equity crowdfunding/crowdinvesting should include separate, non-price-setting tranches for the general public.