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Collusion through communication in auctions

Agranov, Marina and Yariv, Leeat (2018) Collusion through communication in auctions. Games and Economic Behavior, 107 . pp. 93-108. ISSN 0899-8256. http://resolver.caltech.edu/CaltechAUTHORS:20180215-135400954

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Abstract

We study the extent to which communication can serve as a collusion device in one-shot first- and second-price sealed-bid auctions. In an array of laboratory experiments we vary the amount of interactions (communication and/or transfers without commitment) available to bidders. We find that communication alone leads to statistically significant but limited price drops. When, in addition, bidders can exchange transfers, revenues decline substantially, with over 70% of our experimental auctions culminating in the object being sold for approximately the minimal price. Furthermore, the effects of communication and transfers are similar across auction formats. We contrast these results with those generated in repeated auctions. By and large, repeated auctions yield lower collusion and lower efficiency levels.


Item Type:Article
Related URLs:
URLURL TypeDescription
https://doi.org/10.1016/j.geb.2017.10.021DOIArticle
https://www.sciencedirect.com/science/article/pii/S0899825617301938PublisherArticle
http://resolver.caltech.edu/CaltechAUTHORS:20160229-145403385Related ItemWorking Paper
Additional Information:© 2017 Elsevier Inc. Received 20 January 2017, Available online 7 November 2017. We thank Dino Gerardi, Ben Gillen, Sotiris Georganas, Stephen Morris, Jean-Laurent Rosenthal, two anonymous reviewers, and the Advisory Editor for useful suggestions. We also thank Joy Basinger, Silvia Kim, Tatiana Mayskaya, and Li Song for superb research assistance. We gratefully acknowledge financial support from the National Science Foundation (SES 0963583 and SES 1629613) as well as the Gordon and Betty Moore Foundation (Grant 1158).
Funders:
Funding AgencyGrant Number
NSFSES-0963583
NSFSES-1629613
Gordon and Betty Moore Foundation1158
Subject Keywords:Auctions; Communication; Collusion; Experiments
Classification Code:JEL: D4; D8; C9
Record Number:CaltechAUTHORS:20180215-135400954
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20180215-135400954
Official Citation:Marina Agranov, Leeat Yariv. Collusion through communication in auctions, Games and Economic Behavior, Volume 107, 2018, Pages 93-108, ISSN 0899-8256, https://doi.org/10.1016/j.geb.2017.10.021. (http://www.sciencedirect.com/science/article/pii/S0899825617301938)
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:84852
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:15 Feb 2018 22:53
Last Modified:15 Feb 2018 22:53

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