Download or read book Testing for Collusion in Asymmetric First Price Auctions written by Gaurab Aryal and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes a two step procedure to detect collusion in asymmetric first-price procurement (auctions). First, we use a reduced form test to short-list bidders whose bidding behavior is at-odds with competitive bidding; and Second, we estimate the (latent) cost for these bidders under both competition and collusion setups. Since, for the same bid the recovered cost must be smaller under collusion- as collusion increases the mark-up- than under competition, detecting collusion boils down to testing for first-order stochastic dominance, for which we use the classic Kolmogorov-Smirnov and Wilcoxon-Mann-Whitney tests. Our Bootstrap based Monte Carlo experiments for asymmetric bidders confirm that the procedure has good power to detect collusion when there is collusion. We implement the tests for Highway Procurement data in California and conclude that there is no evidence of collusion even though the reduced form test supports collusion. This highlights potential pitfalls of inferring collusion based only on reduced form tests.

Download or read book A Study of Collusion in First Price Auctions written by Martin Pesendorfer and published by . This book was released on 2001 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the bidding for school milk contracts in Florida and Texas during the 1980s. In both states firms were convicted of bid-rigging. The data and legal evidence suggest that the cartels in the two states allocate contracts in different ways: One cartel divides the market among members, while the other cartel also uses side payments to compensate that both forms of cartel agreements are almost optimal, provided the number of contracts is sufficiently large. In the auction the cartel bidder may face competition from non-cartel bidders. The presence of an optimal cartel induces an asymmetry in the auction. The selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non-cartel bidder. The data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels.

Download or read book Identification and Inference in First Price Auctions with Collusion written by Karl Edward Schurter and published by . This book was released on 2017 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation develops a method to detect collusion and estimate its effect on the seller's revenue in first-price auctions with independent, private valuations. The challenge is that collusion may be difficult to detect because colluders can use a simple and costless strategy to make their bids appear competitive. If the econometrician observes an exogenous shifter of the level of competition in the auction in addition to the winning bids, a statistical test for collusion by a given bidder can be formulated as a test of independence between the exogenous shifter and the valuations that rationalize its bids under the null hypothesis that it is not colluding. Simulations confirm this test performs well even when colluders attempt to disguise their behavior. I then adopt a multiple hypothesis testing framework to simultaneously test for collusion bidder by bidder. By controlling the probability of making one or more type I errors, the set of rejected hypotheses serves as a lower confidence bound on the set of colluders. To produce a lower confidence bound on the cost of collusion, I use consistent estimates of the bidders' valuation distributions to numerically solve for the seller's expected revenues in auctions with and without collusion. To provide an example of this identification strategy, I use exogenous variation in the reserve prices at British Columbia's timber auctions to estimate the extent of collusion in the years preceding a lumber trade dispute between the United States and Canada.

Download or read book Identifying Collusion in English Auctions written by Vadim Marmer and published by . This book was released on 2017 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a fully nonparametric identification framework and a test of collusion in ascending bid auctions. Assuming efficient collusion, we show that the underlying distributions of values can be identified despite collusive behaviour when there is at least one bidder outside the cartel. We propose a nonparametric estimation procedure for the distributions of values and a bootstrap test of the null hypothesis of competitive behaviour against the alternative of collusion. Our framework allows for asymmetric bidders, and the test can be performed on individual bidders. The test is applied to the Guaranteed Investment Certificate auctions conducted by US municipalities over the Internet. Despite the fact that there have been allegations of collusion in this market, our test does not detect deviations from competition. A plausible explanation of this finding is that the Internet auction design involves very limited information disclosure.

Download or read book On the Impact of Low balling written by Paul Pezanis-Christou and published by . This book was released on 1997 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Putting Auction Theory to Work written by Paul Milgrom and published by Cambridge University Press. This book was released on 2004-01-12 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.

Download or read book Collusion and Information Revelation in Auctions written by Aniol Llorente-Saguer and published by . This book was released on 2017 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: The theoretical literature on collusion in auctions suggests that the first-price mechanism can deter the formation of bidding rings. However, such analyses neglect to consider the effects of failed collusion attempts, wherein information revealed in the negotiation process may affect bidding behavior. We experimentally test a setup in which theory predicts no collusion and no information revelation in first-price auctions. The results reveal a hitherto overlooked failing of the first-price mechanism: failed collusion attempts distort bidding behavior, resulting in a loss of seller revenue and efficiency. Moreover, the first-price mechanism does not result in less collusion than the second-price mechanism. We conclude that, while the features of the first-price mechanism may have the potential to deter bidder collusion, the role of beliefs in guiding bidding behavior make it highly susceptible to distortions arising from the informational properties of collusive negotiation. Auction designers should take this phenomenon into account when choosing the auction mechanism.

Download or read book Issues in Industrial Relations and Management 2013 Edition written by and published by ScholarlyEditions. This book was released on 2013-05-01 with total page 1135 pages. Available in PDF, EPUB and Kindle. Book excerpt: Issues in Industrial Relations and Management: 2013 Edition is a ScholarlyEditions™ book that delivers timely, authoritative, and comprehensive information about Management Science. The editors have built Issues in Industrial Relations and Management: 2013 Edition on the vast information databases of ScholarlyNews.™ You can expect the information about Management Science in this book to be deeper than what you can access anywhere else, as well as consistently reliable, authoritative, informed, and relevant. The content of Issues in Industrial Relations and Management: 2013 Edition has been produced by the world’s leading scientists, engineers, analysts, research institutions, and companies. All of the content is from peer-reviewed sources, and all of it is written, assembled, and edited by the editors at ScholarlyEditions™ and available exclusively from us. You now have a source you can cite with authority, confidence, and credibility. More information is available at http://www.ScholarlyEditions.com/.

Download or read book Collusion Detection in Auctions Using Machine Learning Algorithms written by Muskan Rathi and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This interdisciplinary honors thesis in Computational Economics investigates the different methods to compute auction equilibria and the impact of collusion on auction outcomes and the effectiveness of various machine learning algorithms in detecting collusive behavior using real-world datasets. We develop a program to analyze the Bayesian Nash equilibrium strategies of bidders in first-price and second-price auctions under scenarios with and without collusion. We further explore the performance of different machine learning algorithms, including Support Vector Machine (SVM), which demonstrates the highest F1 score in detecting collusion among the tested algorithms. The challenges associated with obtaining real-life auction data necessitate the use of synthetic data, providing a valuable resource for developing and validating anti-collusion algorithms in the future.This research contributes to a deeper understanding of auction dynamics and collusion, informing policymakers and regulators in designing robust auction mechanisms, implementing effective anti-collusion measures, and promoting fair and efficient market outcomes.

Download or read book The First Price Sealed Bid Auction with Asymmetric Bidders written by Patrick L. Bajari and published by . This book was released on 1997 with total page 272 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Econometric Analysis of Stochastic Dominance written by Yoon-Jae Whang and published by Cambridge University Press. This book was released on 2019-01-31 with total page 279 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a comprehensive analysis of stochastic dominance through coverage of concepts, methods of estimation, inferential tools, and applications.

Download or read book The Economics of Collusion written by Robert C. Marshall and published by MIT Press. This book was released on 2012-04-27 with total page 315 pages. Available in PDF, EPUB and Kindle. Book excerpt: An examination of collusive behavior: what it is, why it is profitable, how it is implemented, and how it might be detected. Explicit collusion is an agreement among competitors to suppress rivalry that relies on interfirm communication and/or transfers. Rivalry between competitors erodes profits; the suppression of rivalry through collusion is one avenue by which firms can enhance profits. Many cartels and bidding rings function for years in a stable and peaceful manner despite the illegality of their agreements and incentives for deviation by their members. In The Economics of Collusion, Robert Marshall and Leslie Marx offer an examination of collusive behavior: what it is, why it is profitable, how it is implemented, and how it might be detected. Marshall and Marx, who have studied collusion extensively for two decades, begin with three narratives: the organization and implementation of a cartel, the organization and implementation of a bidding ring, and a parent company's efforts to detect collusion by its divisions. These accounts—fictitious, but rooted in the inner workings and details from actual cases—offer a novel and engaging way for the reader to understand the basics of collusive behavior. The narratives are followed by detailed economic analyses of cartels, bidding rings, and detection. The narratives offer an engaging entrée to the more rigorous economic discussion that follows. The book is accessible to any reader who understands basic economic reasoning. Mathematical material is flagged with asterisks.

Download or read book Asymmetric First Price Auctions With Uniform Distributions written by Todd R. Kaplan and published by . This book was released on 2007 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: While auction research, including asymmetric auctions, has grown significantly in recent years, there is still little analytical solutions of first-price auctions outside the symmetric case. Even in the uniform case, Griesmer et al. (1967) and Plum (1992) find solutions only to the case where the lower bounds of the two distributions are the same. We present the general analytical solutions to asymmetric auctions in the uniform case for two bidders, both with and without a minimum bid. We show that our solution is consistent with the previously known solutions of auctions with uniform distributions. Several interesting examples are presented including a class where the two bid functions are linear. We hope this result improves our understanding of auctions and provides a useful tool for future research in auctions.

Download or read book Handbook of Industrial Organization written by and published by Elsevier. This book was released on 2021-12-09 with total page 784 pages. Available in PDF, EPUB and Kindle. Book excerpt: Handbook of Industrial Organization Volume 4 highlights new advances in the field, with this new volume presenting interesting chapters. Each chapter is written by an international board of authors. Part of the renowned Handbooks in Economics series Chapters are contributed by some of the leading experts in their fields A source, reference and teaching supplement for industrial organizations or industrial economists

Download or read book Collusion in Uniform price Auctions written by Gautam Goswami and published by . This book was released on 1995 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Collusive Communication Schemes in a First price Auction written by Helmuts Āzacis and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study optimal bidder collusion at first-price auctions when the collusive mechanism only relies on signals about bidders' valuations. We build on Fang and Morris (2006) when two bidders have low or high private valuation of a single object and additionally each receives a private noisy signal from an incentiveless center about the opponent's valuation. We derive the unique symmetric equilibrium of the first price auction for any symmetric, possibly correlated, distribution of signals, when these can only take two values. Next, we find the distribution of 2-valued signals, which maximizes the joint payoffs of bidders. We prove that allowing signals to take more than two values will not increase bidders' payoffs if the signals are restricted to be public. We also investigate the case when the signals are chosen conditionally independently and identically out of n = 2 possible values. We demonstrate that bidders are strictly better off as signals can take on more and more possible values. Finally, we look at another special case of the correlated signals, namely, when these are independent of the bidders' valuations. We show that in any symmetric 2-valued strategy correlated equilibrium, the bidders bid as if there were no signals at all and, hence, are not able to collude. -- Bidder-optimal signal structure ; Collusion ; (Bayes) correlated equilibrium ; First price auction ; Public and private signals

Download or read book The Theory of Collusion and Competition Policy written by Joseph E. Harrington, Jr. and published by MIT Press. This book was released on 2017-11-16 with total page 145 pages. Available in PDF, EPUB and Kindle. Book excerpt: A review of the theoretical research on unlawful collusion, focusing on the impact and optimal design of competition law and enforcement. Collusion occurs when firms in a market coordinate their behavior for the purpose of producing a supracompetitive outcome. The literature on the theory of collusion is deep and broad but most of that work does not take account of the possible illegality of collusion. Recently, there has been a growing body of research that explicitly focuses on collusion that runs afoul of competition law and thereby makes firms potentially liable for penalties. This book, by an expert on the subject, reviews the theoretical research on unlawful collusion, with a focus on two issues: the impact of competition law and enforcement on whether, how long, and how much firms collude; and the optimal design of competition law and enforcement. The book begins by discussing general issues that arise when models of collusion take into account competition law and enforcement. It goes on to consider game-theoretic models that encompass the probability of detection and penalties incurred when convicted, and examines how these policy instruments affect the frequency of cartels, cartel duration, cartel participation, and collusive prices. The book then considers the design of competition law and enforcement, examining such topics as the formula for penalties and leniency programs. The book concludes with suggested future lines of inquiry into illegal collusion.