A Test for Collusion between a Bidder and an Auctioneer in Sealed-Bid Auctions

32 Pages Posted: 3 May 2005  

Allan T. Ingraham

Economists Incorporated; affiliation not provided to SSRN

Abstract

This paper derives a regression-based test to detect bidder-auctioneer cheating in sealed bid auctions. I apply this regression test to data from the New York City School Construction Authority auctions, an approximate one billion dollar per year auction market in which an auctioneer engaged in bidder-auctioneer cheating. Using the regression analysis to compare lots where bid rigging occurred with certainty to all other auctions allows one to conclude that bidder-auctioneer cheating significantly distorted the bid distribution. Comparing specific auctioneer lots before news of the cheating scandal became public with those after the scandal, I find significant differences in bidding, at the 10 percent level of significance, for two auctioneers. Therefore, bidder-auctioneer cheating may not have been limited to the one auctioneer charged with rigging bids.

Keywords: First-price auctions, collusion, bid-rigging, bidder-auctioneer cheating, order statistics, spacing

Suggested Citation

Ingraham, Allan T., A Test for Collusion between a Bidder and an Auctioneer in Sealed-Bid Auctions. Available at SSRN: https://ssrn.com/abstract=712881 or http://dx.doi.org/10.2139/ssrn.712881

Allan T. Ingraham (Contact Author)

Economists Incorporated ( email )

2121 K St NW
Suite 1100
Washington, DC 20037
United States
202-747-3540 (Phone)

HOME PAGE: http://www.naviganteconomics.com

affiliation not provided to SSRN

Paper statistics

Downloads
183
Rank
135,527
Abstract Views
1,035