American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Misbehavior in Common Value Auctions: Bidding Rings and Shills
American Economic Journal: Microeconomics
vol. 15,
no. 1, February 2023
(pp. 171–200)
Abstract
We characterize the optimal misbehavior by bidding rings or an auctioneer in the ascending English auction with common values. We also show, in an extended game, that in equilibrium potential members join and truthfully reveal their signals. Under a separability assumption, behavior does not change if nonring bidders are informed about the ring's existence. In general, misbehavior in dynamic settings is more profitable than in outcome-equivalent static settings. However, under a stronger separability assumption, the ring can do no better in the dynamic English format than in the outcome-equivalent, static Sophi format.Citation
Levin, Dan, and James Peck. 2023. "Misbehavior in Common Value Auctions: Bidding Rings and Shills." American Economic Journal: Microeconomics, 15 (1): 171–200. DOI: 10.1257/mic.20200447Additional Materials
JEL Classification
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design
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