Cartel stability in experimental first-price sealed-bid and English auctions

Abstract

Using laboratory experiments, we compare the stability of bidding rings in the English auction and the first-price sealed-bid auction in a heterogeneous-value setting. In both a re-matching condition and a fixed-matching condition, we observe that biddings rings are more stable in the English auction than in the first-price sealed-bid auction. In both conditions, the first-price sealed-bid auction dominates the English auction in terms of average revenue and the revenue spread. The English auction outperforms the first-price sealed-bid auction in terms of efficiency.

Keywords: Cartel Stability, English Auction, First-Price Sealed-Bid Auction, Laboratory Experiments

JEL Classification: C92, D44, L41