The Spite Motive and Equilibrium Behavior in Auctions

  title={The Spite Motive and Equilibrium Behavior in Auctions},
  author={John Morgan and Kenneth Steiglitz and George Reis},
We study auctions where bidders have independent private values but attach a disutility to the surplus of rivals, and derive symmetric equilibria for first-price, second-price, English, and Dutch auctions. We find that equilibrium bidding is more aggressive than standard predictions. Indeed, in second-price auctions it is optimal to bid above one’s valuation; that is, bidding “frenzies” can arise in equilibrium. Further, revenue equivalence between second-price and first-price auctions breaks… CONTINUE READING


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