Tacit collusion in repeated auctions

Arbeitspapier

We study tacit collusion in repeated auctions in which bidders can only observe past winners and not their bids. We adopt a stringent interpretation of tacit collusion as collusion without communication about strategies that we model as a symmetry restriction on repeated game strategies: Strategies cannot discriminate among initially nameless bidders until they have become named through winning an auction. We obtain three classes of results: (1) Completely refraining from using names, i.e. strengthening the symmetry constraint, rules out collusion altogether, and even if naming is permitted, as per our definition of tacit collusion, the lack of communication limits collusive strategies and payoffs among impatient bidders. (2) If communication is allowed, there are sustained improvements over bid rotation and competitive bidding among patient bidders. (3) These gains extend to tacit collusion among patient bidders. However, whether tacit or not, collusion need not be efficient.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 01-23

Classification and Topics

• Classification: Wirtschaft ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Auctions
• Subject: tacit collusion ; auctions ; supergames ; strategic uncertainty ; language ; attainability

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Blume, Andreas ; Heidhues, Paul
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/50979
• Last update: 10.03.2025, 11:44 AM CET