The vulnerability of auctions to bidder collusion

Robert Clifford Marshall, Leslie M. Marx

Research output: Contribution to journalArticle

23 Citations (Scopus)

Abstract

Previous work has addressed the relative vulnerability of different auction schemes to collusive bidding. The common wisdom is that ascending-bid and second-price auctions are highly susceptible to collusion. We show that the details of ascending-bid and second-price auctions, including bidder registration procedures and procedures for information revelation during the auction, can be designed to completely inhibit, or unintentionally facilitate, certain types of collusion. If auctions are designed without acknowledging the possibility of collusion then the design will ignore key features that impact the potential success of colluding bidders.

Original languageEnglish (US)
Pages (from-to)883-910
Number of pages28
JournalQuarterly Journal of Economics
Volume124
Issue number2
DOIs
StatePublished - May 1 2009

Fingerprint

Vulnerability
Collusion
Auctions
Second-price auction
Bid
Information revelation
Registration
Bidding
Wisdom

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

@article{b35b8253abe04cde9e481b68c171ecf1,
title = "The vulnerability of auctions to bidder collusion",
abstract = "Previous work has addressed the relative vulnerability of different auction schemes to collusive bidding. The common wisdom is that ascending-bid and second-price auctions are highly susceptible to collusion. We show that the details of ascending-bid and second-price auctions, including bidder registration procedures and procedures for information revelation during the auction, can be designed to completely inhibit, or unintentionally facilitate, certain types of collusion. If auctions are designed without acknowledging the possibility of collusion then the design will ignore key features that impact the potential success of colluding bidders.",
author = "Marshall, {Robert Clifford} and Marx, {Leslie M.}",
year = "2009",
month = "5",
day = "1",
doi = "10.1162/qjec.2009.124.2.883",
language = "English (US)",
volume = "124",
pages = "883--910",
journal = "Quarterly Journal of Economics",
issn = "0033-5533",
publisher = "Oxford University Press",
number = "2",

}

The vulnerability of auctions to bidder collusion. / Marshall, Robert Clifford; Marx, Leslie M.

In: Quarterly Journal of Economics, Vol. 124, No. 2, 01.05.2009, p. 883-910.

Research output: Contribution to journalArticle

TY - JOUR

T1 - The vulnerability of auctions to bidder collusion

AU - Marshall, Robert Clifford

AU - Marx, Leslie M.

PY - 2009/5/1

Y1 - 2009/5/1

N2 - Previous work has addressed the relative vulnerability of different auction schemes to collusive bidding. The common wisdom is that ascending-bid and second-price auctions are highly susceptible to collusion. We show that the details of ascending-bid and second-price auctions, including bidder registration procedures and procedures for information revelation during the auction, can be designed to completely inhibit, or unintentionally facilitate, certain types of collusion. If auctions are designed without acknowledging the possibility of collusion then the design will ignore key features that impact the potential success of colluding bidders.

AB - Previous work has addressed the relative vulnerability of different auction schemes to collusive bidding. The common wisdom is that ascending-bid and second-price auctions are highly susceptible to collusion. We show that the details of ascending-bid and second-price auctions, including bidder registration procedures and procedures for information revelation during the auction, can be designed to completely inhibit, or unintentionally facilitate, certain types of collusion. If auctions are designed without acknowledging the possibility of collusion then the design will ignore key features that impact the potential success of colluding bidders.

UR - http://www.scopus.com/inward/record.url?scp=67650109920&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=67650109920&partnerID=8YFLogxK

U2 - 10.1162/qjec.2009.124.2.883

DO - 10.1162/qjec.2009.124.2.883

M3 - Article

VL - 124

SP - 883

EP - 910

JO - Quarterly Journal of Economics

JF - Quarterly Journal of Economics

SN - 0033-5533

IS - 2

ER -