COLLUSION IN UNIFORM-PRICE AUCTIONS - EXPERIMENTAL-EVIDENCE AND IMPLICATIONS FOR TREASURY AUCTIONS

We provide experimental evidence that nonbinding preplay communication between bidders in auctions of shares facilitates the adoption of equ ilibrium strategies: collusive strategies in uniform-price auctions, a nd the unique equilibrium in undominated strategies in discriminately auctions. When communication between bidders is introduced clearing pr ices and auctioneer profits in uniform-price auctions fan below those observed in discriminatory auctions. This evidence suggests that unifo rm-price auctions of Treasury securities may result in lower revenues than the currently employed discriminatory procedure.