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.
|Date of creation:|
|Date of revision:||06 Oct 2011|
|Contact details of provider:|| Postal: |
Web page: http://hevra.haifa.ac.il/econ/en/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Athey, Susan & Bagwell, Kyle, 2001.
"Optimal Collusion with Private Information,"
RAND Journal of Economics,
The RAND Corporation, vol. 32(3), pages 428-65, Autumn.
- Aoyagi, Masaki, 2003. "Bid rotation and collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 112(1), pages 79-105, September.
- Eso, Peter & Schummer, James, 2004.
"Bribing and signaling in second price auctions,"
Games and Economic Behavior,
Elsevier, vol. 47(2), pages 299-324, May.
- McAfee, R. Preston & McMillan, John., 1990.
726, California Institute of Technology, Division of the Humanities and Social Sciences.
- Blume, Andreas & Heidhues, Paul, 2006.
"Private monitoring in auctions,"
Journal of Economic Theory,
Elsevier, vol. 131(1), pages 179-211, November.
- 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.
- Hopenhayn, Hugo A. & Skrzypacz, Andrzej, 2001.
"Tacit Collusion in Repeated Auctions,"
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.
When requesting a correction, please mention this item's handle: RePEc:haf:huedwp:wp201107. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Rubinchik)
If references are entirely missing, you can add them using this form.