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Private monitoring in auctions

  • Blume, Andreas
  • Heidhues, Paul

We study collusion in repeated first-price auctions under the condition of minimal information release by the auctioneer. In each auction a bidder only learns whether or not he won the object. Bidders do not observe other bidders’ bids, who participates or who wins in case they are not the winner. We show that for large enough discount factors collusion can nevertheless be supported in the infinitely repeated game. While there is a unique Nash equilibrium in public strategies, in which bidders bid competitively in every period, there are simple Nash equilibria in private strategies that support bid rotation. Equilibria that either improve on bid rotation or satisfy the requirement of Bayesian perfection, but not both, are only slightly more complex. Our main result is the construction of perfect Bayesian equilibria that improve on bid rotation. These equilibria require complicated inferences off the equilibrium path. A deviator may not know who has observed his deviation and consequently may have an incentive to use strategic experimentation to learn about the bidding behavior of his rivals. ZUSAMMENFASSUNG - (Privates Monitoring in Auktionen) Der Beitrag untersucht, inwieweit Bieter Kollusion, bzw. stillschweigende Abkommen, in wiederholten Erstpreisauktionen aufrecht erhalten können, in welchen der Auktionator alle Informationen zurückhält. Nach jeder Auktion lernt ein Bieter nur, ob er das Objekt gewonnen hat oder nicht. Ein Bieter kann weder die Gebote der anderen Bieter beobachten, noch kann er beobachten, welche Bieter an der Auktion teilgenommen haben und wer gewonnen hat - solange er nicht selbst das Objekt erhält. Wir zeigen, dass in dem unendlich wiederholten Spiel für hinreichend geduldige Bieter Kollusion möglich ist. Es existiert zwar ein eindeutiges Gleichgewicht in öffentlichen Strategien, in welchem die Bieter in jeder Periode kompetitiv bieten, aber es gibt einfache Nash-Gleichgewichte in privaten Strategien, die Bieterrotation durchsetzen. Wir zeig

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 131 (2006)
Issue (Month): 1 (November)
Pages: 179-211

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Handle: RePEc:eee:jetheo:v:131:y:2006:i:1:p:179-211
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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