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An experimental study of auctioneers’ and bidders’ preferences over corruption in auctions

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  • Saucedo Cepeda, Abraham

Abstract

This paper examines the role of auctioneers’ payoff structure in determining (a) their willingness to solicit bribes in exchange for an auctioned item, (b) their preference over soliciting a bribe from an auction’s highest- or lowest-bidder, and (c) the likelihood an auction is won by its highest-bidder. I conduct an auction experiment with bribery in which auctioneers’ net-of-bribes payoffs are not fixed, but depend on the size of the winning bid. Bribery reduces the probability of victory of highest-bidders and average winning bids. When auctioneers’ payoffs are highly dependent on winning bids they are less likely to solicit a bribe and more likely to choose the highest-bidder when soliciting one. These results indicate that aligning auctioneers’ personal profit-maximization objectives with the desired outcome of the auction mechanism reduces the likelihood and negative effects of bribery in auctions.

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  • Saucedo Cepeda, Abraham, 2024. "An experimental study of auctioneers’ and bidders’ preferences over corruption in auctions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    • Handle: RePEc:eee:soceco:v:108:y:2024:i:c:s2214804323001672
    DOI: 10.1016/j.socec.2023.102141
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