DANGO EXPERIMENTS

We designed experiments to simulate the designated bidding that charac terizes Japanese public procurement. We examine the effects of the num ber of designated bidders, disclosure of winning prices, and communica tion among bidders (''dango''). When communication is not allowed, win ning prices are very close to competitive prices and winning prices te nd to decrease or stay constant as periods proceed. When communication is allowed, subjects easily formed very robust cartels and found winn ing bids close to the maximum price prepared by the experimenters. No significant effects were observed regarding the number of subjects and the disclosure of winning prices.