Email
Print Friendly
A A A

Atlanta Fed Working Papers


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

Gautam Goswami, Thomas Noe, and Michael Rebello
Federal Reserve Bank of Atlanta
Working Paper 95-5
September 1995

PDFDownload the full text of this paper in Adobe Acrobat 4.0 PDF format - (1.1 MB)
DOWNLOAD ACROBAT® READER SOFTWARE

In uniform-price auctions of shares there exist collusive equilibria in which bidders capture the entire surplus from the auction as well as competitive equilibria in which the auctioneer captures the entire surplus from the auction. We provide experimental evidence that, in uniform-price auctions, non-binding pre-play communication facilitates convergence to collusive equilibrium outcomes. On the other hand, regardless of the opportunities for communication, in discriminatory-auction experiments subject strategies conform closely with the unique equilibrium in undominated strategies in which bidders' gains are equal to the smallest "tick size" in the bidding schedule. This evidence suggests that uniform-price auctions of Treasury securities may result in lower revenues than the currently employed discriminatory procedure.

To receive notification about new papers or to order copies of printed papers, please use our Publications Order Form.