Abstract

http://ssrn.com/abstract=1484230
 
 

References (24)



 
 

Citations (4)



 


 



Tacit Collusion in Auctions and Conditions for its Facilitation and Prevention: Equilibrium Selection in Laboratory Experimental Markets


Jin Li


Northwestern University - Department of Management & Strategy

Charles R. Plott


California Institute of Technology - Division of the Humanities and Social Sciences


Economic Inquiry, Vol. 47, No. 3, pp. 425-448, July 2009

Abstract:     
The paper studies bidder behavior in simultaneous, continuous, ascending price auctions. We design and implement a “collusion incubator” environment based on a type of public, symmetrically “folded” and “item-aligned” preferences. Tacit collusion develops quickly and reliably within the environment. Once tacit collusion developed, it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game-theoretic model. The only successful remedy was a non-public change in the preference of participants that destroyed the symmetrically, “folded” and “item aligned” patterns of preferences, creating head-to-head competition between two agents reminiscent of the concept of a “maverick.”

Number of Pages in PDF File: 24

JEL Classification: L50, L94, D43

Accepted Paper Series





Date posted: October 8, 2009  

Suggested Citation

Li, Jin and Plott, Charles R., Tacit Collusion in Auctions and Conditions for its Facilitation and Prevention: Equilibrium Selection in Laboratory Experimental Markets. Economic Inquiry, Vol. 47, No. 3, pp. 425-448, July 2009. Available at SSRN: http://ssrn.com/abstract=1484230 or http://dx.doi.org/10.1111/j.1465-7295.2008.00152.x

Contact Information

Jin Li
Northwestern University - Department of Management & Strategy ( email )
Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
Charles R. Plott
California Institute of Technology - Division of the Humanities and Social Sciences ( email )
1200 East California Blvd.
337 Baxter Hall
Pasadena, CA 91125
United States
626-395-4209 (Phone)
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References:  24
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