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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. Carolyn Pitchik, 1989. "Budget-Constrained Sequential Auctions With Incomplete Information," STICERD - Theoretical Economics Paper Series 201, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  2. Todd R. Kaplan & Shmuel Zamir, 2014. "Advances in Auctions," Discussion Papers 1405, Exeter University, Department of Economics.
  3. Adamo, Tim & Matros, Alexander, 2009. "A Blotto game with Incomplete Information," Economics Letters, Elsevier, vol. 105(1), pages 100-102, October.
  4. Kovenock, Dan & Roberson, Brian, 2011. "A Blotto game with multi-dimensional incomplete information," Economics Letters, Elsevier, vol. 113(3), pages 273-275.
  5. Kala Krishna, 1999. "Auctions with endogenous valuations: the snowball effect revisited," Economic Theory, Springer, vol. 13(2), pages 377-391.
  6. Masili, Gustavo, 2006. "Auction with aftermarket for budget constrained bidders," MPRA Paper 2134, University Library of Munich, Germany.
  7. Dolf Talman & Zaifu Yang, 2013. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Papers 13/31, Department of Economics, University of York.
  8. Megidish, Reut & Sela, Aner, 2011. "Sequential Contests with Synergy and Budget Constraints," CEPR Discussion Papers 8383, C.E.P.R. Discussion Papers.
  9. Reut Megidish & Aner Sela, 2014. "Sequential contests with synergy and budget constraints," Social Choice and Welfare, Springer, vol. 42(1), pages 215-243, January.
  10. Verwer, S. & Zhang, Y., 2011. "Revenue Prediction in Budget-constrained Sequential Auctions with Complementarities," ERIM Report Series Research in Management 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 Uni.
  11. Talman, A.J.J. & Yang, Z.F., 2011. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Paper 2011-096, Tilburg University, Center for Economic Research.
  12. Che, Yeon-Koo & Gale, Ian & Kim, Jinwoo, 2013. "Efficient assignment mechanisms for liquidity-constrained agents," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 659-665.
  13. Aner Sela & Reut Megidish, 2012. "Sequential Contests With Synergy And Budget Constraints," Working Papers 1212, Ben-Gurion University of the Negev, Department of Economics.
  14. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
  15. Paul Pezanis-Christou, 2013. "Asymmetric Multiple-Object First-Price Auctions," School of Economics Working Papers 2013-07, University of Adelaide, School of Economics.
  16. Beker, Pablo & Hernando-Veciana, Angel, 2013. "Bidding Markets with Financial Constraints," The Warwick Economics Research Paper Series (TWERPS) 1017, University of Warwick, Department of Economics.

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