EFFECTS OF ASYMMETRY ON EX ANTE CORRUPTION AT AUCTIONS

I study an auction in which bidders can bribe the auctioneer before they bid and before they know the identity of the winner, with the auctioneer lowering the winner’s bid if the winner was the one who paid the bribe. In equilibrium, only bidders with valuations higher than some critical value pay the bribe. Corruption has no effect on either efficiency or the bidders ’ expected payoffs when the bidders are symmetric, but may improve efficiency when bidders are symmetric and the required bribe is sufficiently high. Ex ante bribery might be more profitable for the auctioneer than ex post bribery, in which a bribe is solicited from the winner after bids are submitted