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The Effect of Corruption on Bidding Behavior in First-Price Auctions

Author

Listed:
  • Federico Weinschelbaum

    () (Department of Economics, Universidad de San Andres)

  • Leandro Arozamena

    (Universidad Torcuato Di Tella)

Abstract

When the owner of an object sells it through an auction run by an agent of hers, corruption may appear. In a first-price auction, corruption can make honest bidders more or less aggressive, or their behavior can remain unchanged. We identify sufficient conditions for each of the three possibilities. We analyze the effects of corruption on efficiency, bidders' welfare and expected revenue. Our results apply as well to the situation--unrelated to corruption--where one of the bidders is granted a right of first refusal.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Federico Weinschelbaum & Leandro Arozamena, 2005. "The Effect of Corruption on Bidding Behavior in First-Price Auctions," Working Papers 82, Universidad de San Andres, Departamento de Economia, revised Aug 2005.
  • Handle: RePEc:sad:wpaper:82
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    References listed on IDEAS

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    More about this item

    Keywords

    Auctions; corruption; Right-of-first-refusal;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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