Collusion in Uniform-Price Auctions: Experimental Evidence and Implications for Treasury Auctions
REVIEW OF FINANCIAL STUDIES, Vol. 9 No. 3
Posted: 6 Nov 1996
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Collusion in Uniform-Price Auctions: Experimental Evidence and Implications for Treasury Auctions
Abstract
We provide experimental evidence that non-binding pre-play communication between bidders in auctions of shares facilitates the adoption of equilibrium strategies: collusive strategies in uniform-price auctions, and the unique equilibrium in undominated strategies in discriminatory auctions. When communication between bidders is introduced, clearing prices and auctioneer profits in uniform-price auctions fall below those observed in discriminatory auctions. This evidence suggests that uniform-price auctions of Treasury securities may result in lower revenues than the currently-employed discriminatory procedure.
JEL Classification: G39
Suggested Citation: Suggested Citation