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Competition Between Friends and Foes

Author

Listed:
  • Wladislaw Mill

  • John Morgan

Abstract

While social preferences have been shown to be an important predictor in economic decision making it has been largely ignored in describing auction behavior. We build on theoretical models of spiteful bidding to test experimentally whether the rival's type impact bidding behavior in an auction. For that purpose, we collect data on competitions -- in form of first-price auctions -- between Donald Trump and Hillary Clinton voters. We show that the rival's type -- i.e., the competitor supports the same candidate (i.e., friend) or the competitor supports another candidate (i.e., a foe) -- influences auction behavior. Clinton voters compete more aggressively against Trump voters compared to fellow Clinton voters, in line with the theory on spiteful bidding. Trump voters, on the other hand, do not compete more aggressively against Clinton voters compared to fellow Trump voters. This behavior still prevails even if we account for beliefs. Using data on attitudes suggest that spite might be driving this behavior. We conclude that preferences over the opponent seem to influence behavior even in a competitive setting.

Suggested Citation

  • Wladislaw Mill & John Morgan, 2020. "Competition Between Friends and Foes," CRC TR 224 Discussion Paper Series crctr224_2020_242, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2020_242
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp242
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    Cited by:

    1. Oliver Kirchkamp & Wladislaw Mill, 2019. "Spite vs. risk: explaining overbidding," CESifo Working Paper Series 7631, CESifo.
    2. Adrien Coiffard & Raphaële Préget & Mabel Tidball, 2023. "Target versus budget reverse auctions: an online experiment using the strategy method," CEE-M Working Papers hal-04055743, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    3. Adrien Coiffard & Raphaële Préget & Mabel Tidball, 2025. "Target versus budget reverse auctions: an online experiment using the strategy method," Post-Print hal-05251684, HAL.
    4. Hoeft, Leonard & Mill, Wladislaw, 2024. "Abuse of power," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 305-324.
    5. Kirchkamp, Oliver & Liu, Shulin & Mill, Wladislaw & Wang, Xiangyu, 2025. "Spiteful bidding in first-price all-pay auctions," Economics Letters, Elsevier, vol. 254(C).
    6. Adrien Coiffard & Raphaële Préget & Mabel Tidball, 2023. "Target versus budget reverse auctions: an online experiment using the strategy method," Working Papers hal-04055743, HAL.
    7. Brunner, Fabian & Gamm, Fabian & Mill, Wladislaw, 2023. "MyPortfolio: The IKEA effect in financial investment decisions," Journal of Banking & Finance, Elsevier, vol. 154(C).
    8. Wladislaw Mill & John Morgan, 2022. "The cost of a divided America: an experimental study into destructive behavior," Experimental Economics, Springer;Economic Science Association, vol. 25(3), pages 974-1001, June.

    More about this item

    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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