Bids as a Vehicle of (Mis)Information: Collusion in English Auctions with Affiliated Values

Marco Pagnozzi

Journal of Economics & Management Strategy, 2011, vol. 20, issue 4, 1171-1196

Abstract: In an English auction, a bidder’s strategy depends on the prices at which his competitors drop out, because these convey information on the value of the object on sale. A ring of colluding bidders can strategically manipulate the information transmitted through its members’ bids, in order to mislead other bidders into bidding less aggressively and thus allow a designated bidder to bid more aggressively. Collusion increases the probability that the ring wins the auction and reduces the price it pays. The presence of a ring harms other bidders (as well as the seller) and reduces efficiency.

Date: 2011
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https://doi.org/10.1111/j.1530-9134.2011.00318.x

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Working Paper: Bids as a Vehicle of (Mis)Information: Collusion in English Auctions with Affiliated Values (2004)
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