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

Gautam Goswami; Thomas H. Noe; Michael J. Rebello

doi:10.1093/rfs/9.3.757

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

Gautam Goswami¹; Thomas H. Noe^2,3; Michael J. Rebello³

¹ Fordham University · ² Federal Reserve Bank of Atlanta · ³ Georgia State University

Review of Financial Studies 1996

We provide experimental evidence that nonbinding preplay 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.

DOI: 10.1093/rfs/9.3.757
Volume: 9 (3)
Pages: 757-785
Language: en
Export: BibTeX
Sources: openalex crossref