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Anonymity deters collusion in hard-close auctions: Experimental Evidence

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  • Tibor Neugebauer

    ()
    (Luxembourg School of Finance, University of Luxembourg)

  • Sascha Füllbrunn

    ()
    (University of Magdeburg)

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    Abstract

    This paper studies whether collusion occurs in three-bidder three-object second-price hard-close auctions. The experimental results of two laboratory treatments are reported. The first one, the anonymity treatment,involves subject groups which can trace decisions to the bidder under conditions of anonymity. The second one, the friends treatment, involves groups of subjects who know each other. In this treatment each bid can be identified with a person. The paper reports no collusion in the anonymity treatment but some collusion in the friends treatment.

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    Bibliographic Info

    Paper provided by Luxembourg School of Finance, University of Luxembourg in its series LSF Research Working Paper Series with number 08-09.

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    Date of creation: 2008
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    Handle: RePEc:crf:wpaper:08-09

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    Related research

    Keywords: multi-unit auctions; collusion; experimental economics;

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    References

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    1. Tibor Neugebauer, 2007. "Bid and price effects of increased competition in the first-price auction: experimental evidence," LSF Research Working Paper Series 07-17, Luxembourg School of Finance, University of Luxembourg.
    2. Veronika Grimm & Frank Riedel & Elmar G. Wolfstetter, 2001. "Low Price Equilibrium in Multi-Unit Auctions: The GSM Spectrum Auction in Germany," CESifo Working Paper Series 506, CESifo Group Munich.
    3. Brusco, Sandro & Lopomo, Giuseppe, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Review of Economic Studies, Wiley Blackwell, vol. 69(2), pages 407-36, April.
    4. Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2003. "An Experimental Analysis of Ending Rules in Internet Auctions," CESifo Working Paper Series 987, CESifo Group Munich.
    5. Jehiel, Philippe & Moldovanu, Benny, 2000. "License Auctions and Market Structure," CEPR Discussion Papers 2530, C.E.P.R. Discussion Papers.
    6. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    7. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
    8. Anthony M. Kwasnica & Katerina Sherstyuk, 2007. "Collusion and Equilibrium Selection in Auctions," Economic Journal, Royal Economic Society, vol. 117(516), pages 120-145, 01.
    9. Professor Paul Klemperer, 2000. "What Really Matters in Auction Design," Microeconomics 0004008, EconWPA.
    10. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.
    11. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
    12. Isaac, R. Mark & Ramey, Valerie & Williams, Arlington W., 1984. "The effects of market organization on conspiracies in restraint of trade," Journal of Economic Behavior & Organization, Elsevier, vol. 5(2), pages 191-222, June.
    13. Haan, Marco & Kooreman, Peter & Riemersma, Tineke, 2006. "Friendship in a Public Good Experiment," IZA Discussion Papers 2108, Institute for the Study of Labor (IZA).
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