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The Nature of Collusion Facilitating and Collusion Breaking Power of Simultaneous Ascending Price and Simultaneous Descending Price Auctions

Brown, Alexander and Plott, Charles R. and Sullivan, Heidi Kamp (2007) The Nature of Collusion Facilitating and Collusion Breaking Power of Simultaneous Ascending Price and Simultaneous Descending Price Auctions. Social Science Working Paper, 1302. California Institute of Technology , Pasadena, CA. (Unpublished) http://resolver.caltech.edu/CaltechAUTHORS:20170727-144612067

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Abstract

This paper demonstrates that a robust, tacit collusion evolves quickly in a collusion incubator environment, but is destroyed by the simultaneous, descending price auction. Theories of collusion-producing behavior, along with the detail of the states on which strategies are conditioned, lead to a deeper understanding of how tacit collusion evolves and its necessary conditions. These theories explain how the descending price auction destroys the collusion. The experiments proceed by conducting simultaneous ascending price auctions in the collusion incubator. Then, once the tacit collusion developed, changing to the descending auction. The change moved prices from collusive levels to near competitive levels.


Item Type:Report or Paper (Working Paper)
Additional Information:Forthcoming in: The RAND Journal of Economics. The financial support of the National Science Foundation, the Caltech Laboratory for Experimental Economics and Political Science and the Lee Center for Advanced Networking is gratefully acknowledged. The authors benefited from comments of Jin Li, Katerina Sherstyuk, Ian Krajbich, and an anonymous referee.
Group:Social Science Working Papers
Funders:
Funding AgencyGrant Number
NSFUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Caltech Lee Center for Advanced NetworkingUNSPECIFIED
Subject Keywords:tacit collusion, information, auctions, game theory
Classification Code:JEL: L50, L94, D43
Record Number:CaltechAUTHORS:20170727-144612067
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20170727-144612067
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79504
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:02 Aug 2017 20:57
Last Modified:02 Aug 2017 20:57

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