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Cover of: Bidding among Friends and Enemies with Symmetric Information
David Ettinger

Bidding among Friends and Enemies with Symmetric Information

Section: Articles
Volume 166 (2010) / Issue 2, pp. 365-385 (21)
Published 09.07.2018
DOI 10.1628/093245610791342996
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Summary
We consider an auction setting, in a symmetric information framework, in which bidders, even if they fail to obtain the good, care about the price paid by the winner. We prove that the outcome of the first-price auction is not affected by identity-independent price externalities, while the outcome of the second-price auction is. In contrast, identity-dependent price externalities affect the outcome of both auction formats. In any case, the second-price auction exacerbates the effects of price externalities.