Bribing and signaling in second price auctions

Péter Eso, James Schummer*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


We examine whether a two-bidder, second-price auction for a single good (with private, independent values) is immune to a simple form of collusion, where one bidder may bribe the other to commit to stay away from the auction (i.e. submit a bid of zero). In either of two cases - where the potential bribe is fixed or allowed to vary - the only robust equilibria involve bribing. In the fixed-bribe case, there is a unique such equilibrium. In the variable bribes case, all robust equilibria involve low briber-types revealing themselves through the amount they offer, while all high types offer the same bribe; only one such equilibrium is continuous. Bribing in all cases causes inefficiency.

Original languageEnglish (US)
Pages (from-to)299-324
Number of pages26
JournalGames and Economic Behavior
Issue number2
StatePublished - May 2004


  • Bribing
  • Collusion
  • Second-price auction
  • Signaling

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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