Journal Article

Multiple-Object Auctions with Budget Constrained Bidders

Jean-Pierre Benoît and Vijay Krishna

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 68, issue 1, pages 155-179
Published in print January 2001 | ISSN: 0034-6527
Published online January 2001 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00164
Multiple-Object Auctions with Budget Constrained Bidders

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A seller with two objects faces a group of bidders who are subject to budget constraints. The objects have common values to all bidders but need not be identical, and may be either complements or substitutes. In a simple complete information setting we show: (1) if the objects are sold by means of a sequence of open ascending auctions, then it is always optimal to sell the more valuable object first; (2) the sequential auction yields more revenue than the simultaneous ascending auction used recently by the FCC if the discrepancy in the values is large, or if there are significant complementarities; (3) a hybrid simultaneous-sequential form is revenue superior to the sequential auction; and (4) budget constraints arise endogenously.

Journal Article.  0 words. 

Subjects: Economics

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