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A Test for Collusion between a Bidder and an Auctioneer in Sealed-Bid Auctions

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Author Info
Allan Ingraham (none)
Abstract

This paper derives a regression-based test to detect bidder-auctioneer cheating in sealed bid auctions. I apply this regression test to data from the New York City School Construction Authority auctions, an approximate one billion dollar per year auction market in which an auctioneer engaged in bidder-auctioneer cheating. Using the regression analysis to compare lots where bid rigging occurred with certainty to all other auctions allows one to conclude that bidder-auctioneer cheating significantly distorted the bid distribution. Comparing specific auctioneer lots before news of the cheating scandal became public with those after the scandal, I find significant differences in bidding, at the 10 percent level of significance, for two auctioneers. Therefore, bidder-auctioneer cheating may not have been limited to the one auctioneer charged with rigging bids.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Contributions to Economic Analysis & Policy.

Volume (Year): 4 (2005)
Issue (Month): 1 ()
Pages: 1448-1448
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Handle: RePEc:bep:eapcon:v:4:y:2005:i:1:p:1448-1448

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Related research
Keywords: Collusion bid-rigging first-price auction procurement auction

Find related papers by JEL classification:
L4 - Industrial Organization - - Antitrust Issues and Policies

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-92, June. [Downloadable!] (restricted)
    Other versions:
  2. Porter, Robert H & Zona, J Douglas, 1993. "Detection of Bid Rigging in Procurement Auctions," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 518-38, June. [Downloadable!] (restricted)
    Other versions:
  3. Rothkopf, Michael H & Harstad, Ronald M, 1995. "Two Models of Bid-Taker Cheating in Vickrey Auctions," Journal of Business, University of Chicago Press, vol. 68(2), pages 257-67, April. [Downloadable!] (restricted)
  4. Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 381-411, July.
  5. Marc S. Robinson, 1985. "Collusion and the Choice of Auction," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 141-145, Spring. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David G. Blanchflower, 2007. "Entrepreneurship in the United States," IZA Discussion Papers 3130, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Roberto Burguet & Martin Perry, 2007. "Bribery and Favoritism by Auctioneers in Sealed-Bid Auctions," Contributions to Theoretical Economics, Berkeley Electronic Press, vol. 7(1), pages 1219-1219. [Downloadable!] (restricted)
    Other versions:
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