Multiple-Object Auctions with Budget Constrained Bidders

Jean-Pierre Benoit and Vijay Krishna
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Jean-Pierre Benoit: New York University
Vijay Krishna: Penn State University

Game Theory and Information from EconWPA

Abstract: 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.

Keywords: Auctions; Budgets (search for similar items in EconPapers)
JEL-codes: D44 D61 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mic
Date: 1998-05-05, Revised 1999-07-26
Note: Type of Document - SciWord-LaTex; prepared on IBM PC ; to print on HP Laserjet 4; pages: 34; figures: None
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