Collusion via Signaling in Multiunit Auctions with Synergies: An Experimental Test
By Katerina Sherstyuk
Abstract
This study presents an experimental test of bidder collusion in open ascending auctions with multiple objects. The project is based on the theoretical results by Brusco and Lopomo (1999), who give theoretical support for the following claims: (1) Generalized English auctions can be vulnerable to collusion in the multi-object case; (2) The sole presence of complementarities does not hinder collusion; (3) Collusion is a "low numbers" phenomenon.We conduct experiments that are designed to test the above three claims. The institution is simultaneous ascending price auction. We focus on the case of two objects. Several experimental treatments are considered: markets with low numbers (2 bidders) and high numbers (5 bidders), no complementarities (additive values) and complementarities (superadditive values). Experimental results are largely consistent with the theory. Collusion is often observed in two-person markets with or without complementarities. Previous experience under the same treatment greatly facilitates bidder collusion. There is no evidence of collusion in five-person markets. We further study collusive strategies adopted by bidders in two-person markets.