Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86984
Authors: 
Hinloopen, Jeroen
Onderstal, Sander
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper 10-120/1
Abstract: 
We experimentally examine the collusive properties of two commonly used auctions: the English auction (EN) and the first-price sealed-bid auction (FPSB). In theory, both tacit and overt collusion are always incentive compatible in EN while both can be incentive compatible in FPSB if the auction is repeated and bidders are patient enough. We find that the auctions do not differ in subjects’ propensity to collude overtly and in the likelihood that subjects defect from a collusive agreement. Moreover, the average winning bid does not differ between the auctions unless subjects can collude overtly. Under overt collusion, stable cartels buy at a lower price in EN than in FPSB resulting in a lower average winning bid in EN.
Subjects: 
Collusion
English auction
First-price sealed-bid auction
Laboratory experiments
JEL: 
C92
D44
L41
Document Type: 
Working Paper

Files in This Item:
File
Size
214.44 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.