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 equilibrium strategies: collusive strategies in uniform-price auctions, and the unique equilibrium in undominated strategies in discriminately auctions. When communication between bidders is introduced clearing prices and auctioneer profits in uniform-price auctions fan below those observed in discriminatory auctions. This evidence suggests that uniform-price auctions of Treasury securities may result in lower revenues than the currently employed discriminatory procedure.