Spite and Reciprocity in Auctions
AbstractThe paper presents a complete information model of bidding in second price sealed-bid and ascending-bid (English) auctions, in which potential buyers know the unit valuation of other bidders and may spitefully prefer that their rivals earn a lower surplus. Bidders with spiteful preferences should overbid in equilibrium when they know their rival has a higher value than their own, and bidders with a higher value underbid to reciprocate the spiteful overbidding of the lower value bidders. The model also predicts different bidding behavior in second price as compared to ascending-bid auctions. The paper also presents experimental evidence broadly consistent with the model. In the complete information environment, lower value bidders overbid more than higher value bidders, and they overbid more frequently in the second price auction than in the ascending price auction. Overall, the lower value bidder submits bids that exceed value about half the time. These patterns are not found in the incomplete information environment, consistent with the model. View Full-Text
- Supplementary File 1:
XLSX-Document (XLSX, 200 KB)
Scifeed alert for new publicationsNever miss any articles matching your research from any publisher
- Get alerts for new papers matching your research
- Find out the new papers from selected authors
- Updated daily for 49'000+ journals and 6000+ publishers
- Define your Scifeed now
Nishimura, N.; Cason, T.N.; Saijo, T.; Ikeda, Y. Spite and Reciprocity in Auctions. Games 2011, 2, 365-411.
Nishimura N, Cason TN, Saijo T, Ikeda Y. Spite and Reciprocity in Auctions. Games. 2011; 2(3):365-411.Chicago/Turabian Style
Nishimura, Naoko; Cason, Timothy N.; Saijo, Tatsuyoshi; Ikeda, Yoshikazu. 2011. "Spite and Reciprocity in Auctions." Games 2, no. 3: 365-411.