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Collusion in Multiple Object Simultaneous Auctions: Theory and Experiments

Kwasnica, Anthony M. (1998) Collusion in Multiple Object Simultaneous Auctions: Theory and Experiments. Social Science Working Paper, 1010. California Institute of Technology , Pasadena, CA. (Unpublished)

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The choice of strategies by bidders who are allowed to communicate in auctions are studied. Using the tools of mechanism design, the possible outcomes of communication between bidders participating in a series of simultaneous first-price auctions are investigated. A variety of mechanisms are incentive compatible when side payments are not allowed. When attention is restricted to mechanisms which rely only on bidders' ordinal rankings of markets, incentive compatibility is characterized and the ranking mechanism of Pesendorfer (1996) is shown to be interim incentive efficient. Laboratory experiments were completed in order to investigate the existence, stability, and effect on bidder and seller surplus of cooperative agreements in multiple object simultaneous first-price auctions. Collusive agreements stable in the laboratory. The choices of the experimental subjects often closely match the choices predicted by the ranking and serial dictator mechanisms presented earlier. However, a few notable exceptions raise interesting prospects for the theoretical development of models of cooperative behavior.

Item Type:Report or Paper (Working Paper)
Additional Information:Revised version. Original dated to March 1998. Thank you to John Ledyard, Simon Wilkie, Dave Porter, and Julie Scott for their comments and patience. Any errors are the author's.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:1010
Record Number:CaltechAUTHORS:20170814-145511145
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80378
Deposited By: Jacquelyn Bussone
Deposited On:15 Aug 2017 16:41
Last Modified:03 Oct 2019 18:30

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