Bribing in second-price auctions
An IPV 2-bidder second-price auction is preceded by two rounds of bribing: prior to the auction each bidder can try to bribe his rival to depart from the auction, so that he (the briber) will become the sole participant and obtain the good for the reserve price. Bribes are offered sequentially according to an exogenously given order - there is a first mover and a second mover. I characterize the unique efficient collusive equilibrium in monotonic strategies; in it, the second mover extracts the entire collusive gain. This equilibrium remains an equilibrium even when valuations are interdependent, and if they are separable then the full surplus extraction result continues to hold. Additionally, a family of pooling equilibria is studied, in which all the types of the first mover offer the same bribe.
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- Aoyagi, Masaki, 2007.
"Efficient collusion in repeated auctions with communication,"
Journal of Economic Theory,
Elsevier, vol. 134(1), pages 61-92, May.
- Masaki Aoyagi, 2002. "Efficient Collusion in Repeated Auctions with Communication," ISER Discussion Paper 0566, Institute of Social and Economic Research, Osaka University.
- Athey, Susan & Bagwell, Kyle, 2001. "Optimal Collusion with Private Information," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 428-465, Autumn.
- Susan Athey & Kyle Bagwell, 1999. "Optimal Collusion with Private Information," Working papers 99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
- Eso, Peter & Schummer, James, 2004. "Bribing and signaling in second price auctions," Games and Economic Behavior, Elsevier, vol. 47(2), pages 299-324, May.
- Peter Eso & James Schummer, 2002. "Bribing and Signalling in Second Price Auctions," Discussion Papers 1357, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Blume, Andreas & Heidhues, Paul, 2006. "Private monitoring in auctions," Journal of Economic Theory, Elsevier, vol. 131(1), pages 179-211, November.
- Andreas Blume & Paul Heidhues, 2003. "Private Monitoring in Auctions," CIG Working Papers SP II 2003-14, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- McAfee, R Preston & McMillan, John, 1992. "Bidding Rings," American Economic Review, American Economic Association, vol. 82(3), pages 579-599, June.
- McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences.
- Skrzypacz, Andrzej & Hopenhayn, Hugo, 2004. "Tacit collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 114(1), pages 153-169, January.
- Hopenhayn, Hugo A. & Skrzypacz, Andrzej, 2001. "Tacit Collusion in Repeated Auctions," Research Papers 1698r2, Stanford University, Graduate School of Business.
- Pavlov, Gregory, 2008. "Auction design in the presence of collusion," Theoretical Economics, Econometric Society, vol. 3(3), September.
- Aoyagi, Masaki, 2003. "Bid rotation and collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 112(1), pages 79-105, September. Full references (including those not matched with items on IDEAS)
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