Collusion via Signaling in Multiple Object Auctions with Complementarities- An Experimental Test
We experimentally study bidder collusion in open ascending auctions for multiple objects. The project is based on the theoretical results by Brusco and Lopomo (1999), who give theoretical support for the following claims: (1) simultaneous ascending bid auctions can be vulnerable to collusion in the multi-object case; (2) The sole presence of complementarities does not hinder collusion; (3) Collusion is a “lown umbers” phenomenon. We focus on a simultaneous ascending auction for two objects. Several experimental treatments are considered: markets with low numbers (2 bidders) and high numbers (5 bidders), no complementarities (additive values) and complementarities (superadditive values). Experimental results are largely consistent with the theory. Collusion is often observed in two-person markets with or without complementarities. Previous experience under the same treatment greatly facilitates bidder collusion. There is no evidence of collusion in five-person markets. We further study collusive strategies adopted by bidders in two-person markets. While most strategies make extensive use of signaling, in the presence of complementarities, bidders use collusive strategies that are supported only by repeated play.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: 2424 Maile Way, Honolulu, HI 96822|
Web page: http://www.economics.hawaii.edu/
More information through EDIRC
|Order Information:|| Web: http://www.economics.hawaii.edu/research/working.html Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Isaac, R. Mark & Walker, James M., 1985. "Information and conspiracy in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 6(2), pages 139-159, June.
- Milgrom, Paul, 1998. "Game theory and the spectrum auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 771-778, May.
- Katerina Sherstyuk, 1999.
"Collusion Without Conspiracy: An Experimental Study of One-Sided Auctions,"
Springer;Economic Science Association, vol. 2(1), pages 59-75, August.
- Sherstyuk, K., 1998. "Collusion without Conspiracy: An Experimental Study of One-Sided Auctions," Department of Economics - Working Papers Series 610, The University of Melbourne.
- Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation for Research in Economics, Yale University.
- Marshall, R.C. & Richard J.F., 1995.
"Bider Collusion at Forest Service Timber Sales,"
7-95-3, Pennsylvania State - Department of Economics.
- Porter, Robert H & Zona, J Douglas, 1993.
"Detection of Bid Rigging in Procurement Auctions,"
Journal of Political Economy,
University of Chicago Press, vol. 101(3), pages 518-38, June.
- 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.
- Peter Cramton & Jesse Schwartz, 2000.
"Collusive Bidding: Lessons from the FCC Spectrum Auctions,"
Papers of Peter Cramton
00jre, University of Maryland, Department of Economics - Peter Cramton, revised 09 Mar 1999.
- Cramton, Peter & Schwartz, Jesse A, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Journal of Regulatory Economics, Springer, vol. 17(3), pages 229-52, May.
- Robert H. Porter & J. Douglas Zona, 1997.
"Ohio School Milk Markets: An Analysis of Bidding,"
NBER Working Papers
6037, National Bureau of Economic Research, Inc.
- Kwasnica, Anthony M., 2000. "The choice of cooperative strategies in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 323-346, July.
- Anthony M. Kwasnica & Katerina Sherstyuk, 2013.
201301, University of Hawaii at Manoa, Department of Economics.
- Feinstein, Jonathan S & Block, Michael K & Nold, Frederick C, 1985. "Asymmetric Information and Collusive Behavior in Auction Markets," American Economic Review, American Economic Association, vol. 75(3), pages 441-60, June.
- McAfee, R. Preston & McMillan, John., 1990.
726, California Institute of Technology, Division of the Humanities and Social Sciences.
When requesting a correction, please mention this item's handle: RePEc:hai:wpaper:200102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Web Technician)
If references are entirely missing, you can add them using this form.