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The effect of corruption on bidding behavior in first-price auctions

Leandro Arozamena () and Federico Weinschelbaum ()

European Economic Review, 2009, vol. 53, issue 6, 645-657

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.

Keywords: Auctions; Corruption; Right-of-first-refusal (search for similar items in EconPapers)
Date: 2009
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Related works:
Working Paper: The Effect of Corruption on Bidding Behavior in First-Price Auctions (2005)
Working Paper: The Effect of Corruption on Bidding Behavior in First-Price Auctions (2004) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:53:y:2009:i:6:p:645-657

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European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

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