When does cheating on mail-in bids pay? A guide for the dishonest auctioneer

In English auctions an auctioneer sometimes receives (second-price) bids fr om bidders who cannot attend the auction. These bids are referred to as mai l-in bids, left bids, or bookbids, and are commonly handled by an auctionee r's assistant. In this paper I consider auctions where there is one bid lef t with the auctioneer in an English auction with no reserve. The auctioneer can increase his revenue by cheating, at least partially (through phantom bids or large bidding increments), on the bookbid when the bookbidder's val uation is more Likely to be the highest than the second highest among all v aluations. This is true even if, in equilibrium, this cheating is perfectly anticipated. This implies that the acquisition of a good reputation is not a sufficient incentive for honest auctioneer behavior. (C) 1999 Elsevier S cience B.V. All rights reserved. JEL classification: D44; K1; C71.