Collusion via Information Sharing and Optimal Auctions

Olga Gorelkina

No 20182, Working Papers from University of Liverpool, Department of Economics

Abstract: This paper studies collusion via information sharing in the context of auctions. The model of collusion via information sharing builds on Aumann’s (1976) description of knowledge. Robustness of auction mechanisms to collusion via information sharing is defined as the impossibility of an agreement to collude. A cartel can agree to collude on a contract if it is common knowledge within that cartel that the contract is incentive compatible and individually rational. Robust mechanisms are characterized in a number of settings where some, all, or no bidders are bound by limited liability. Finally, the characterization is used in a simple IPV setting to design a mechanism that is both optimal and robust to collusion.

Keywords: Bidder collusion; mechanism design; communication design; no-trade theorem (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2018-08
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-mic and nep-ore
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Forthcoming

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https://www.liverpool.ac.uk/media/livacuk/schoolof ... ormation-sharing.pdf First version, 2018 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:20182

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