Bribing in First-Price Auctions: Corrigendum

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Bribing in First-Price Auctions: Corrigendum

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Title: Bribing in First-Price Auctions: Corrigendum
Author: Kotowski, Maciej Henryk; Rachmilevitch, Shiran

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Citation: Kotowski, Maciej H., and Shiran Rachmilevitch. 2013. Bribing in First-Price Auctions: Corrigendum. 2013. Games and Economic Behavior, in press.
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Abstract: We clarify the sufficient condition for a trivial equilibrium to exist in the model of Rachmilevitch (2013).

Rachmilevitch (2013), henceforth R13, studies the following game. Two ex ante identical players are about to participate in an independent-private-value first-price, sealed bid auction for one indivisible object. After the risk-neutral players learn their valuations but prior to the actual auction, player 1 can offer a take-it-or-leave-it (TIOLI) bribe to his opponent in exchange for the opponent dropping out of the contest. If the offer is accepted, player 1 is the only bidder and obtains the item for free; otherwise, both players compete non-cooperatively in the auction as usual. This is called the first-price TIOLI game.1 R13 shows that under the restriction to continuous and monotonic bribing strategies for player 1, any equilibrium of this game must be trivial—the equilibrium bribing function employed by player 1, if it is continuous and non-decreasing, must be identically zero. In this note, we clarify the sufficient conditions under which a trivial equilibrium exists. These are less stringent than originally proposed.
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