Welcome to the new version of CaltechAUTHORS. Login is currently restricted to library staff. If you notice any issues, please email coda@library.caltech.edu
Published March 8, 2016 | Accepted Version
Report Open

Collusion through Communication in Auctions


We study the extent to which communication can serve as a collusion device in one-shot first- and second-price sealed-bid auctions. Theoretically, second-price auctions are more fragile to collusion through communication than first-price 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 the auctioneer's revenues decrease significantly when bidders can communicate. When, in addition, bidders can make transfer promises, revenues decline substantially, with 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.

Additional Information

October 26, 2015. We thank Dino Gerardi, Ben Gillen, Sotiris Georganas, Stephen Morris, and Jean-Laurent Rosenthal for useful discussions and suggestions and Joy Basinger, Tatiana Mayskaya and Li Song for superb research assistance. We gratefully acknowledge financial support from the National Science Foundation (SES 0963583) and the Gordon and Betty Moore Foundation (Grant 1158).

Attached Files

Accepted Version - collusion_through_communication.pdf


Files (987.4 kB)
Name Size Download all
987.4 kB Preview Download

Additional details

August 20, 2023
August 20, 2023