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Collusion Without Conspiracy: An Experimental Study of One-Sided Auctions

Published online by Cambridge University Press:  14 March 2025

Katerina Sherstyuk
Katerina Sherstyuk*
Affiliation:
Department of Economics, University of Melbourne, Parkville, Victoria 3052, Australia
*
email: katya@cupid.ecom.unimelb.edu.au
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Abstract

The study investigates collusion-nonfacilitating features of one-sided auctions. We report the results of oral nondescending bid auction experiments in which the strict bid improvement rule was absent, and compare them with the results of sealed bid auction experiments. In the sealed bid experiments the outcomes converged to the competitive equilibrium. In the oral auctions, collusive outcomes emerged and were sustained with bidders using bid matching strategies. We conclude that oral auctions provide opportunities for tacit coordination and collusion enforcement that do not exist under the sealed bid. Therefore, the strict bid improvement rule becomes critical for breaking collusion.

Keywords

auction experimentstacit collusion

JEL classification

D44: AuctionsC92: Laboratory, Group Behavior

Information

Type
Research Article
Information
Experimental Economics , Volume 2 , Issue 1 , August 1999, pp. 59 - 75
Copyright
Copyright © 1999 Economic Science Association

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