Bidding among friends and enemies ∗

  title={Bidding among friends and enemies ∗},
  author={David Ettinger},
We consider an auction setting in which bidders, even if they fail to obtain the good, care about the price paid by the winner. We study the impact of these price externalities on the first-price auction and the second-price auction in a symmetric information framework. We establish a distinction between price externalities that do not depend on the identity of the winner and price externalities that depend on the identity of the winner. We prove that the outcome of the first-price auction is… CONTINUE READING

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