An Experimental Evaluation of the Proposed Treasury Auction Mechanism
Vernon Smith, University of Arizona

The project report describes experiments that Vernon and his co-authors ran to determine whether the Treasury’s proposed English clock auction would be subject to implicit collusive manipulations. Although this auction mechanism is designed to minimize to potential for collusion, collusive equilibria are still possible. Whether they are obtained is therefore an experimental question. The results show that collusive equilibria are occasionally obtained among student players, but they are not stable. The proposed auction mechanism offers potential improvement over the existing sealed bid mechanism. (Accepted Spring 1995.)