Cartel stability in experimental first-price sealed-bid and English auctions

Tinbergen Institute Discussion Paper 2019-009/VII

41 Pages Posted: 8 Feb 2019 Last revised: 1 Jul 2020

See all articles by Jeroen Hinloopen

Jeroen Hinloopen

CPB Netherlands Bureau of Economic Policy Analysis; University of Amsterdam - Amsterdam School of Economics (ASE); Tinbergen Institute

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Leonard Treuren

University of Amsterdam - Amsterdam School of Economics (ASE)

Date Written: June 31, 2020

Abstract

Using laboratory experiments, we compare the stability of bidding rings in the English auction and the first-price sealed-bid auction in a heterogeneous-value setting. In both a re-matching condition and a fixed-matching condition, we observe that biddings rings are more stable in the English auction than in the first-price sealed-bid auction. In both conditions, the first-price sealed-bid auction dominates the English auction in terms of average revenue and the revenue spread. The English auction outperforms the first-price sealed-bid auction in terms of efficiency.

Keywords: Cartel Stability, English Auction, First-Price Sealed-Bid Auction, Laboratory Experiments

JEL Classification: C92, D44, L41

Suggested Citation

Hinloopen, Jeroen and Onderstal, Sander and Treuren, Leonard, Cartel stability in experimental first-price sealed-bid and English auctions (June 31, 2020). Tinbergen Institute Discussion Paper 2019-009/VII, Available at SSRN: https://ssrn.com/abstract=3323647 or http://dx.doi.org/10.2139/ssrn.3323647

Jeroen Hinloopen (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Sander Onderstal

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Leonard Treuren

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

HOME PAGE: http://sites.google.com/view/leonardtreuren/home

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