The dollar auction is the most famous version I know of this. In grant proposals, every bidder must pay, not just the top two bidders, which increases the problem dramatically. You see similar effects in lobbying, or really anywhere you can bid for control of a finite pool of resources. The greater the benefits for collusion, the gerater the incentive to defect.
The dollar auction is the most famous version I know of this. In grant proposals, every bidder must pay, not just the top two bidders, which increases the problem dramatically. You see similar effects in lobbying, or really anywhere you can bid for control of a finite pool of resources. The greater the benefits for collusion, the gerater the incentive to defect.
Bryan Caplan makes a similar point about collusion in the classroom.