The effect of collusion on efficiency in experimental auctions

• 成果类型: Article
• 署名作者: Noussair, Charles N.; Seres, Gyula
• 署名单位: University of Arizona; University of Arizona; Humboldt University of Berlin
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2019.11.002
• 发表日期: 2020
• 页码: 267-287
• 关键词: auction; Bidding ring; information asymmetry; experiment

摘要

This paper examines the effect of collusion on allocative efficiency in a second-price sealed-bid auction, in which bidders' valuations have both private and common value components. We present a theoretical model which shows that explicit collusion improves average efficiency. Furthermore, a reduction in common value signal variance increases the efficiency of allocations when a cartel is present. We test for the presence of these patterns in a laboratory experiment. Subjects can choose whether to compete or to form a cartel. Colluding bidders can communicate and make side payments using a knockout auction. Our results show that a large majority of bidders joins a cartel and collusion has a negative impact on efficiency. (C) 2019 Elsevier Inc. All rights reserved.