Tacti collusion in auctions and conditions for its facilitation and prevention: Equilibrium selection in laboratory experimental markets

The paper studies bidder behavior in simultaneous, continuous, ascending price auctions. We design and implement a "collusion incubator environment based on a type of public, symmetrically "folded and "item-aligned preferences. Tacit collusion develops quickly and reliably within the environment. Once tacit collusion developed, it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game-theoretic model. The only successful remedy was a non-public change in the preference of participants that destroyed the symmetrically, "folded and "item aligned patterns of preferences, creating head-to-head competition between two agents reminiscent of the concept of a "maverick".