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

Marco Pagnozzi

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: During an English auction, bidders' behaviour conveys information on their valuation of the prize. So whenever valuations are not independent, a bidder's strategy depends on the price at which his competitors drop out before he does. A ring of bidders can strategically manipulate the information reported through its members' bids, in order to mislead other bidders into bidding less aggressively and so allow a ring member to bid more aggressively. Collusion increases the probability that a ring bidder wins the auction and reduces the price he pays. The presence of a ring harms other bidders (as well as the seller) and reduces efficiency.

Keywords: auctions; collusion (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2004-10-01
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (1)

Published in Journal of Economics & Management Strategy, 2011, Vol. 20(4), 1171-1196

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Journal Article: Bids as a Vehicle of (Mis)Information: Collusion in English Auctions with Affiliated Values (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:127

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