Abstract
I study a symmetric 2-bidder IPV first-price auction prior to which one bidder can offer his rival a bribe in exchange for the latter's abstention. I focus on pure and undominated strategies, and on continuous monotonic equilibria-equilibria in which the bribing function is continuous and nondecreasing. When types are distributed continuously on the unit interval, such an equilibrium, if it at all exists, is necessarily trivial-its bribing function is identically zero. I provide a sufficient condition for its existence and sufficient conditions for its nonexistence. When the minimum type is strictly positive, a non-trivial equilibrium may exist, but it must be pooling. I provide a sufficient condition for the existence of such an equilibrium. When types are distributed continuously on the unit interval and dominated strategies are allowed, a non-trivial non-pooling equilibrium exists, at least under the uniform prior.
Original language | English |
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Pages (from-to) | 214-228 |
Number of pages | 15 |
Journal | Games and Economic Behavior |
Volume | 77 |
Issue number | 1 |
DOIs | |
State | Published - Jan 2013 |
Keywords
- Bribes
- Collusion
- First-price auctions
ASJC Scopus subject areas
- Finance
- Economics and Econometrics