Abstract:
Bidder Coalitions at English auctions frequently distribute collusive gains among members via a secondary auction or "Knockout". When Coalition members are sufficiently heterogenous, nested coalition structures are observed in which a knockout is conducted at each level of nestig. The nested Knockout's characteristics are investigated. Within many settings we find that the expected payments to coalition members via the nested knockout equal the Shapley value. Incentive copatability problems of the nested knockout are also analyzed.
