The paper studies bidder behavior in simultaneous, continuous, ascending price auctions. We design and implement a “collusion incubator” environment based on a type of public, symmetrically “folded” and “item-aligned” preferences. Tacit collusion develops quickly and reliably within the environment. Once tacit collusion developed, it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game theoretic model. The only successful remedy was a non-public change in the preference of participants that destroyed the symmetrically, “folded” and “item aligned” patterns of preferences, creating head to head competition between two agents reminiscent of the concept of a “maverick”.

This paper develops a simple model of assignment and Pareto learning. The model gives a unified explanation for the following basic facts of wage dynamics. First, the expected wage change increases with experience but the percentage of wage increase declines with it. Second, more educated workers have higher rates of wage growth. Third, the percentage of workers with a wage gain in any cohort decreases with the cohort experience but this percentage is independent of schooling level. The model also sheds light on the puzzle of serial correlation of changes in wage residuals. This model predicts that serial correlations are positive but small. On the other hand, the serial correlations increase with the importance of job matching and decrease with experience. This offers a potential explanation for why positive serial correlations have only been found in a subpopulation of workforce such as young, professional, and managerial workers and not in large, representative data sets.

This paper develops a model of job mobility and wage dispersion. Worker ability affects both firm-specific and general productivity. Employers learn more about the abilities of their workers than do outside firms. The superior information of current employers creates a standard lemons problem in the second-hand labor market. Contrary to existing work, the lemons problem does not lead to market collapse in the model presented here. Instead, there exists a unique equilibrium outcome in which the current employer offers a wage equal to the average output of all types below the ability of the worker, and outside firms compete for workers by using mixed strategies. These mixed strategies lead to a non-degenerate wage distribution for all types of workers. This unique equilibrium outcome determines both the allocation of workers with heterogeneous abilities to different firms and also how wages change when workers change jobs. The model implies that, in the presence of technological change that is skill-biased and also favors general skills over firm-specific skills, the wage distribution will become more spread out (corresponding to greater inequality) and job mobility will increase. The model also suggests that the increase in job mobility should be larger for older workers. These patterns are consistent with recent empirical evidence on changes in job mobility in the United States. This model can be extended to study many labor market issues, including training, layoff rules, career choice, spillover effects, inter-industry wage differentials, and wage changes from job changes.