Bidder-auctioneer cheating in sealed-bid auctions

This dissertation investigates the empirical and game theoretic issues that arise when a single bidder and an auctioneer collude in a sealed bid auction market. Chapter 1 provides a background to the market used as a case study in future chapters, the New York City School Construction Authority auction market. Chapter 2 models bidder-auctioneer cheating as a distortion between the first and second bids, and proposes a test in order to discern whether or not cheating has occurred in a particular auction dataset. Applying this test to data from the New York City School Construction Authority auctions from 1989 to 1996, I find evidence that two auctioneers who were never charged with bid-rigging may have been guilty of bidder-auctioneer cheating. Chapter 3 considers the effect of the suspicion of bidder-auctioneer cheating on the equilibrium bid functions of honest bidders.