Masaki Aoyagi
University of Pittsburg
This paper studies bidder collusion with communication in repeated auctions when no side transfer is possible. It presents a simple dynamic bid rotation scheme which co-ordinates bids based on communication history and enables intertemporal transfer of bidders' payoffs. The paper derives a sufficient condition for such a dynamic scheme to be an equilibrium and characterises the equilibrium payoffs in a general environment with affiliated signals and private or interdependent values. With IPV, it is shown that this dynamic scheme yields a strictly higher payoff to the bidders than any static collusion scheme which co-ordinates bids based only on the current reported signals.
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