Corruption and auctions

Resumo

We investigate how corruption affects the outcome of a first-price auction (bidding behavior, efficiency and the seller's expected revenue). The auctioneer approaches the winner to offer the possibility of a reduction in his bid in exchange for a bribe. The bribe can be a percentage of the difference between the winning and the second-highest bid or a fixed amount. We show that there exists a symmetric bidding strategy equilibrium that is monotone, i.e., higher valuation buyers bid higher. Corruption does not affect efficiency but both the auctioneer's expected bribe and the seller's expected revenue depend on the format of the bribe payments. We also find the optimal bribe scheme. © 2005 Elsevier B.V. All rights reserved.

Ficha do documento

Tipo

Artigo científico

Ano

2006

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso restrito

DOI

10.1016/j.jmateco.2005.04.002

Identificador

oai:repositorio.fgv.br:10438/25311

Temas

Governança

Palavras-chave

AuctionsCorruptionEfficiencyCorrupção