2016/04/26 by Timothy G. Conley, Francesco Decarolis · 1 citation
Decision Sciences · Business, Management and Accounting · Economics, Econometrics and Finance · #Auction Theory and Applications #Consumer Market Behavior and Pricing #Law, Economics, and Judicial Systems #Common value auction #Bidding #Procurement #Unique bid auction #Bid shading #Incentive #Microeconomics #Proxy bid #Business #Econometrics #Economics #Auction theory #Marketing
paper · doi:10.1257/mic.20130254
openalex publication_date 2016/04/26 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
We study entry and bidding in procurement auctions where contracts are awarded to the bid closest to a trimmed average bid. These auctions, common in public procurement, create incentives to coordinate bids to manipulate the bid distribution. We present statistical tests to detect coordinated entry and bidding choices. The tests perform well in a validation dataset where a court case makes coordination observable. We use the tests to detect coordination in a larger dataset where it is suspected, but not known. The results are used to interpret a major market shakeout following a switch to first price auctions. (JEL D44, D47, H57, R42)