A US Treasury Auction Classroom Simulation

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While many Finance and Economics students are familiar with the characteristics of US Treasury debt, few have any experience with the method by which these securities come to market. Conducting a simulation of the auction process can give students the opportunity not only to learn about how securities enter this market, but also to think through the game-theoretic implications of participating in an auction. This article describes an exercise that can be used to teach students in an Fixed Income, Investments, or Economics course about the concept of a second-price auction and the method by which the US Treasury auctions debt.

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