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First-best collusion without communication

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  • Rachmilevitch, Shiran
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    Abstract

    I study a 2-bidder infinitely repeated IPV first-price auction without transfers, communication, or public randomization, where each bidderʼs valuation can assume, in each of the (statistically independent) stage games, one of three possible values. Under certain distributional assumptions, the following holds: for every ϵ>0 there is a nondegenerate interval Δ(ϵ)⊂(0,1), such that if the biddersʼ discount factor belongs to Δ(ϵ), then there exists a Perfect Public Equilibrium with payoffs ϵ-close to the first-best payoffs.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0899825613001607
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    Bibliographic Info

    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 83 (2014)
    Issue (Month): C ()
    Pages: 224-230

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    Handle: RePEc:eee:gamebe:v:83:y:2014:i:c:p:224-230

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    Web page: http://www.elsevier.com/locate/inca/622836

    Related research

    Keywords: Auctions; Collusion; Repeated games;

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    References

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    1. Andreas Blume & Paul Heidhues, 2003. "Private Monitoring in Auctions," CIG Working Papers SP II 2003-14, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    2. Susan Athey & Kyle Bagwell, 2004. "Collusion with persistent cost shocks," Discussion Papers 0405-07, Columbia University, Department of Economics.
    3. Johannes Hörner & Julian Jamison, 2007. "Collusion with (almost) no information," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 804-822, 09.
    4. Birgit Heydenreich & Rudolf Müller & Marc Uetz & Rakesh V. Vohra, 2009. "Characterization of Revenue Equivalence," Econometrica, Econometric Society, vol. 77(1), pages 307-316, 01.
    5. Susan Athey & Kyle Bagwell, 1999. "Optimal Collusion with Private Information," Working papers 99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
    6. McAfee, R Preston & McMillan, John, 1992. "Bidding Rings," American Economic Review, American Economic Association, vol. 82(3), pages 579-99, June.
      • McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences.
    7. Mailath, George J. & Zemsky, Peter, 1991. "Collusion in second price auctions with heterogeneous bidders," Games and Economic Behavior, Elsevier, vol. 3(4), pages 467-486, November.
    8. Rachmilevitch, Shiran, 2013. "Endogenous bid rotation in repeated auctions," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1714-1725.
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    Cited by:
    1. Todd R. Kaplan & Shmuel Zamir, 2014. "Advances in Auctions," Discussion Papers 1405, Exeter University, Department of Economics.

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