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Anonymity deters collusion in hard-close auctions: experimental evidence

Author

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  • Sascha Fullbrunn
  • Tibor Neugebauer

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 that 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.

Suggested Citation

  • Sascha Fullbrunn & Tibor Neugebauer, 2009. "Anonymity deters collusion in hard-close auctions: experimental evidence," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(2), pages 131-148.
  • Handle: RePEc:taf:nzecpp:v:43:y:2009:i:2:p:131-148 DOI: 10.1080/00779950903005499
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    References listed on IDEAS

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    1. Sandro Brusco & Giuseppe Lopomo, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 407-436.
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    3. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
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    5. 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.
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    7. Heidrun C. Hoppe & Philippe Jehiel & Benny Moldovanu, 2006. "License Auctions and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, pages 371-396.
    8. Grimm, Veronika & Riedel, Frank & Wolfstetter, Elmar, 2003. "Low price equilibrium in multi-unit auctions: the GSM spectrum auction in Germany," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1557-1569, December.
    9. Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," RAND Journal of Economics, The RAND Corporation, pages 890-907.
    10. 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.
    11. Anthony M. Kwasnica & Katerina Sherstyuk, 2007. "Collusion and Equilibrium Selection in Auctions," Economic Journal, Royal Economic Society, vol. 117(516), pages 120-145, January.
    12. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
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    Cited by:

    1. Martin Sefton & Ping Zhang, 2014. "Divisible-good uniform price auctions: The role of allocation rules and communication among bidders," Research in Experimental Economics,in: Experiments in Financial Economics, volume 16, pages 53-86 Emerald Publishing Ltd.
    2. repec:wsi:igtrxx:v:13:y:2011:i:01:n:s021919891100285x is not listed on IDEAS
    3. Ping Zhang, 2009. "Characterization of Pure Strategy Equilibria in Uniform Price IPO Auctions," Discussion Papers 2009-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

    More about this item

    Keywords

    multi-unit auctions; collusion; experimental economics;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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