First-Price Auctions with Budget Constraints

Maciej Kotowski

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: Consider a first-price, sealed-bid auction with interdependent valuations and private budget constraints. Private budget constraints introduce subtle strategic tradeoffs with first-order consequences for equilibrium bidding. In a pure-strategy, symmetric equilibrium, agents may adopt discontinuous bidding strategies resulting in a stratification of competition along the budget dimension. In an asymmetric setting, equilibria in “nondecreasing†strategies exist, albeit in a qualified sense. Private budgets introduce significant confounds for the interpretation of bidding data due to their interaction with risk preferences and their countervailing strategic implications.

JEL-codes: D44 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Journal Article: First-price auctions with budget constraints (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp19-021

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