Bidding collusion without passive updating

B-Tier
Journal: Journal of Mathematical Economics
Year: 2019
Volume: 85
Issue: C
Pages: 70-77

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Collusion here takes the form of a side transfer between two bidders proposed by a mediator, before a first-price auction with independent private values. I find a necessary and sufficient condition, in terms of the bidders’ prior distributions, for existence of a side transfer acceptable to all types of both bidders on path of a perfect Bayesian equilibrium. The class of distributions defined by this condition is larger than the class under the passive updating assumption in the mechanism design literature on collusion. The off-path posterior belief most conducive to collusion entails a continuation equilibrium as if the collusion vetoer were bidding against a naive, value-bidding rival.

Technical Details

RePEc Handle
repec:eee:mateco:v:85:y:2019:i:c:p:70-77
Journal Field
Theory
Author Count
1
Added to Database
2026-01-29