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Refusing to lose: Reciprocity in complete information first-price sealed-bid auctions

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  • Mannahan, Rachel

Abstract

I characterize the pure strategy equilibria in complete information, first-price sealed-bid auctions when bidders have reciprocity preferences. While the equilibria under selfish preferences persist, two additional types of equilibria arise under reciprocity. There is an equilibrium with negative reciprocity in which a bidder with a low value may refuse to lose by overbidding to win the auction. There is also an equilibrium with positive reciprocity in which several bidders collude by submitting a tying bid at a low price.

Suggested Citation

  • Mannahan, Rachel, 2025. "Refusing to lose: Reciprocity in complete information first-price sealed-bid auctions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 119(C).
    • Handle: RePEc:eee:soceco:v:119:y:2025:i:c:s2214804325001478
    DOI: 10.1016/j.socec.2025.102483
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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