Collusion in private value ascending price auctions

Abstract

We investigate bidder collusion in one-sided ascending price auctions without communication. If bidding rules in an English-type auction allow bidders to match each other's' bids, collusion can be sustained as a Nash equilibrium of a one-shot auction game. Our earlier experiments show that in common value auctions with complete information, collusion does occur and is sustainable even when bidders cannot explicitly coordinate their strategies. In this study, we investigate the robustness of bidders' collusive behavior in private values, private information environments. We find that collusion still occurs as long as the bidders' gains from collusion are high.

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