Perfect bidder collusion through bribe and request

Jingfeng Lu, Zongwei Lu and Christian Riis

Games and Economic Behavior, 2021, vol. 129, issue C, 1-14

Abstract: We study collusion in a second-price auction with two bidders in a dynamic environment. One bidder can make a take-it-or-leave-it collusion proposal, which consists of both an offer and a request of bribes, to the opponent. We show that there always exists a robust equilibrium in which the collusion success probability is one. In the equilibrium, for each type of initiator the expected payoff is generally higher than the counterpart in any robust equilibria of the single-option model (Esö and Schummer (2004)) and any other separating equilibria in our model.

Keywords: Second-price auction; Collusion; Multidimensional signaling; Bribe (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:129:y:2021:i:c:p:1-14

DOI: 10.1016/j.geb.2021.05.001

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