The role of information in Resolution Trust Corporation auctions of failedthrifts

This paper performs empirical tests of alternative auction models, based on the auctions of failed thrifts conducted by the Resolution Trust Corporati on (RTC). RTC auctions are especially appealing because of the availability of a well-defined signal of underlying value as well as a measure of poten tial competition, both missing in previous studies of auctions of failed fi nancial institutions. The evidence suggests that these transactions are bes t described as individual private value auctions and that they are signific antly different from the takeovers of failed financial institutions previou sly studied.