Bidding among Friends and Enemies with Symmetric Information

David Ettinger ()

Journal of Institutional and Theoretical Economics (JITE), 2010, vol. 166, issue 2, 365-385

Abstract: We consider an auction setting, in a symmetric information framework, in which bidders, even if they fail to obtain the good, care about the price paid by the winner. We prove that the outcome of the first-price auction is not affected by identity-independent price externalities, while the outcome of the second-price auction is. In contrast, identity-dependent price externalities affect the outcome of both auction formats. In any case, the second-price auction exacerbates the effects of price externalities.

JEL-codes: D44 D62 G32 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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