How to Cheat the Auctioneer: Collusion in Auctions when Signals are Affiliated

This paper analyses collusive behaviour at auctions within the general symmetric model where signals are affiliated. A mechanism which allows information sharing is proposed, and first and second price collusive auction mechanisms (knock-out auctions) from the literature on bid rigging within the independent private values model are extended to be applicable within the more general model. The paper focuses on ex post efficient cartel mechanisms and show that the assumption of affiliation does not discourage collusion and that information sharing is both feasible and raises the gains of collusive behaviour relative to the knock-out auctions.