Collusion in Uniform-Price Auctions: Experimental Evidence and Implications for Treasury Auctions

REVIEW OF FINANCIAL STUDIES, Vol. 9 No. 3

Posted: 6 Nov 1996

See all articles by Gautam Goswami

Gautam Goswami

Fordham University - Finance Area

Michael J. Rebello

University of Texas at Dallas - Naveen Jindal School of Management

Thomas H. Noe

University of Oxford - Said Business School; University of Oxford - Balliol College; Bank of Finland; European Corporate Governance Institute

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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

Goswami, Gautam and Rebello, Michael J. and Noe, Thomas H., Collusion in Uniform-Price Auctions: Experimental Evidence and Implications for Treasury Auctions. REVIEW OF FINANCIAL STUDIES, Vol. 9 No. 3, Available at SSRN: https://ssrn.com/abstract=7880

Gautam Goswami

Fordham University - Finance Area ( email )

33 West 60th Street
New York, NY 10023
United States
212-636-6181 (Phone)
212-765-5573 (Fax)

Michael J. Rebello

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Thomas H. Noe (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 3BJ
United Kingdom

University of Oxford - Balliol College ( email )

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United Kingdom

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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