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Budget-Constrained Sequential Auctions with Incomplete Information

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  • Carolyn Pitchik

Abstract

I study a budget-constrained, private-valuation, sealed-bid sequential auction with two incompletely-informed, risk-neutral bidders in which the valuations and income may be non-monotonic functions of a bidder's type. Multiple equilibrium symmetric bidding functions may exist that differ in allocation, efficiency and revenue. The sequence of sale affects the competition for a good and therefore also affects revenue and the prices of each good in a systematic way that depends on the relationship among the valuations and incomes of bidders. The sequence of sale may affect prices and revenue even when the number of bidders is large relative to the number of goods. If a particular good, say α, is allocated to a strong bidder independent of the sequence of sale, then auction revenue and the price of good α are higher when good α is sold first.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-342.

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Length: 38 pages
Date of creation: 22 Oct 2008
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-342

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Keywords: sequential auctions; budget constraints; efficiency; revenue; price; sequence;

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References

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Citations

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Cited by:
  1. Reut Megidish & Aner Sela, 2014. "Sequential contests with synergy and budget constraints," Social Choice and Welfare, Springer, Springer, vol. 42(1), pages 215-243, January.
  2. Talman, A.J.J. & Yang, Z.F., 2011. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Paper, Tilburg University, Center for Economic Research 2011-096, Tilburg University, Center for Economic Research.
  3. Carolyn Pitchik, 2008. "Budget-Constrained Sequential Auctions with Incomplete Information," Working Papers, University of Toronto, Department of Economics tecipa-342, University of Toronto, Department of Economics.
  4. Kala Krishna, 1990. "Auctions with Endogenous Valuations, The Snowball Effect Revisited," NBER Working Papers 3483, National Bureau of Economic Research, Inc.
  5. Dan Kovenock & Brian Roberson, 2010. "A Blotto Game with Multi-Dimensional Incomplete Information," Purdue University Economics Working Papers 1262, Purdue University, Department of Economics.
  6. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, Springer, vol. 151(3), pages 679-693, June.
  7. Kaplan, Todd R & Zamir, Shmuel, 2014. "Advances in Auctions," MPRA Paper 54656, University Library of Munich, Germany.
  8. Paul Pezanis-Christou, 2013. "Asymmetric Multiple-Object First-Price Auctions," School of Economics Working Papers, University of Adelaide, School of Economics 2013-07, University of Adelaide, School of Economics.
  9. Megidish, Reut & Sela, Aner, 2011. "Sequential Contests with Synergy and Budget Constraints," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8383, C.E.P.R. Discussion Papers.
  10. Verwer, S. & Zhang, Y., 2011. "Revenue Prediction in Budget-constrained Sequential Auctions with Complementarities," ERIM Report Series Research in Management, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasm ERS-2011-020-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  11. Beker, Pablo & Hernando-Veciana, Angel, 2013. "Bidding Markets with Financial Constraints," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 1017, University of Warwick, Department of Economics.
  12. Dolf Talman & Zaifu Yang, 2013. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Papers, Department of Economics, University of York 13/31, Department of Economics, University of York.
  13. Adamo, Tim & Matros, Alexander, 2009. "A Blotto game with Incomplete Information," Economics Letters, Elsevier, Elsevier, vol. 105(1), pages 100-102, October.
  14. Che, Yeon-Koo & Gale, Ian & Kim, Jinwoo, 2013. "Efficient assignment mechanisms for liquidity-constrained agents," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(5), pages 659-665.
  15. Masili, Gustavo, 2006. "Auction with aftermarket for budget constrained bidders," MPRA Paper 2134, University Library of Munich, Germany.
  16. Aner Sela & Reut Megidish, 2012. "Sequential Contests With Synergy And Budget Constraints," Working Papers, Ben-Gurion University of the Negev, Department of Economics 1212, Ben-Gurion University of the Negev, Department of Economics.

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