Spiteful bidders in auctions boost revenue, changing game theory dynamics.
The article explores how spiteful bidders in auctions can affect their bidding strategies. Spiteful bidders care about both their own profit and their competitors' losses. In 1st-price auctions, spiteful bidders tend to be truthful. Surprisingly, the number of bidders doesn't affect the equilibrium strategy in 2nd-price auctions. Expected revenue is higher in 2nd-price auctions when bidders are even slightly spiteful and care about their own profit. Revenue equivalence only holds when all bidders are either self-interested or completely malicious. Revealing bidders' valuations reduces revenue in 2nd-price auctions but increases it in 1st-price auctions.