"Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions"
Auctions with below-bid pricing (e.g., uniform-price, ascending, and Vickrey auctions) have remarkable theoretical properties, but practitioners are skeptical about their implementation. We present a dynamic model of collusion in multiunit auctions that explains this gap between theory and practice....
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ftrepec:oai:RePEc:tky:fseres:2018cf1096 2023-05-15T16:10:43+02:00 "Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" Sanna Laksá Daniel Marszalec Alexander Teytelboym http://www.cirje.e.u-tokyo.ac.jp/research/dp/2018/2018cf1096.pdf unknown http://www.cirje.e.u-tokyo.ac.jp/research/dp/2018/2018cf1096.pdf preprint ftrepec 2020-12-04T13:43:23Z Auctions with below-bid pricing (e.g., uniform-price, ascending, and Vickrey auctions) have remarkable theoretical properties, but practitioners are skeptical about their implementation. We present a dynamic model of collusion in multiunit auctions that explains this gap between theory and practice. To sustain collusion at the reserve price, bidders submit crank-handle bids. The cost of sustaining crank-handle collusion depends on the degree of below-bid pricing in the auction. Our model predicts that crank-handle collusion is easier to sustain in auctions with more below-bid pricing and when bidders are more symmetric. Evidence from uniform-price, ascending, and pay-as-bid auctions of fishing quota in the Faroe Islands is in line with our predictions. Report Faroe Islands RePEc (Research Papers in Economics) Faroe Islands |
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RePEc (Research Papers in Economics) |
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Auctions with below-bid pricing (e.g., uniform-price, ascending, and Vickrey auctions) have remarkable theoretical properties, but practitioners are skeptical about their implementation. We present a dynamic model of collusion in multiunit auctions that explains this gap between theory and practice. To sustain collusion at the reserve price, bidders submit crank-handle bids. The cost of sustaining crank-handle collusion depends on the degree of below-bid pricing in the auction. Our model predicts that crank-handle collusion is easier to sustain in auctions with more below-bid pricing and when bidders are more symmetric. Evidence from uniform-price, ascending, and pay-as-bid auctions of fishing quota in the Faroe Islands is in line with our predictions. |
format |
Report |
author |
Sanna Laksá Daniel Marszalec Alexander Teytelboym |
spellingShingle |
Sanna Laksá Daniel Marszalec Alexander Teytelboym "Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" |
author_facet |
Sanna Laksá Daniel Marszalec Alexander Teytelboym |
author_sort |
Sanna Laksá |
title |
"Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" |
title_short |
"Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" |
title_full |
"Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" |
title_fullStr |
"Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" |
title_full_unstemmed |
"Epic Fail: How Below-Bid Pricing Backfires in Multiunit Auctions" |
title_sort |
"epic fail: how below-bid pricing backfires in multiunit auctions" |
url |
http://www.cirje.e.u-tokyo.ac.jp/research/dp/2018/2018cf1096.pdf |
geographic |
Faroe Islands |
geographic_facet |
Faroe Islands |
genre |
Faroe Islands |
genre_facet |
Faroe Islands |
op_relation |
http://www.cirje.e.u-tokyo.ac.jp/research/dp/2018/2018cf1096.pdf |
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1765995864707301376 |