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Fighting collusion in auctions: An experimental investigation

  • Hu, Audrey
  • Offerman, Theo
  • Onderstal, Sander

The danger of collusion presents a serious challenge for auctioneers. In this paper, we compare the collusive properties of two standard auctions, the English auction and the first-price sealed-bid auction, and a lesser-known format, the Amsterdam (second-price) auction. In the Amsterdam auction, the highest losing bidder earns a premium for stirring up the price. We study two settings: in one, all bidders can collude, and in another, only a subset is eligible. The experiments show that the Amsterdam auction triggers less collusion than the standard auctions. We compare experimental results to theoretical predictions, and provide an explanation where they differ.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 1 (January)
Pages: 84-96

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Handle: RePEc:eee:indorg:v:29:y:2011:i:1:p:84-96
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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