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The spite motive in third price auctions

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  • Mill, Wladislaw

Abstract

A spiteful agent losing an auction experiences negative emotions towards the winner. In line with previous experimental findings I show that the symmetric equilibrium bid of a spiteful agent in third price auctions is higher than the risk neural Nash equilibrium bid. Furthermore, it can be shown that spiteful agents bid the same way agents would who anticipate to regret their decision in equilibrium.

Suggested Citation

  • Mill, Wladislaw, 2017. "The spite motive in third price auctions," Economics Letters, Elsevier, vol. 161(C), pages 71-73.
    • Handle: RePEc:eee:ecolet:v:161:y:2017:i:c:p:71-73
    DOI: 10.1016/j.econlet.2017.09.028
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    References listed on IDEAS

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    Cited by:

    1. Wladislaw Mill & Jonathan Stäbler, 2023. "Spite in Litigation," CESifo Working Paper Series 10290, CESifo.
    2. Oliver Kirchkamp & Wladislaw Mill, 2019. "Spite vs. risk: explaining overbidding," CESifo Working Paper Series 7631, CESifo.
    3. Kirchkamp, Oliver & Mill, Wladislaw, 2021. "Spite vs. risk: Explaining overbidding in the second-price all-pay auction," Games and Economic Behavior, Elsevier, vol. 130(C), pages 616-635.
    4. Mill, Wladislaw & Morgan, John, 2022. "Competition between friends and foes," European Economic Review, Elsevier, vol. 147(C).

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    More about this item

    Keywords

    Auction; Overbidding; Spite; Anticipated regret;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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