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Endogenous budget constraints

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  • Hummel, Patrick

Abstract

This paper considers a model in which a single buyer seeks to buy a continuum of objects from a continuum of sellers. The sellers specify prices at which they are willing to sell their objects to the buyer, and the buyer then decides which objects to purchase. I illustrate that the buyer has an incentive to commit to a binding budget constraint before seeking offers from the sellers.

Suggested Citation

  • Hummel, Patrick, 2017. "Endogenous budget constraints," Mathematical Social Sciences, Elsevier, vol. 88(C), pages 11-15.
    • Handle: RePEc:eee:matsoc:v:88:y:2017:i:c:p:11-15
    DOI: 10.1016/j.mathsocsci.2017.04.001
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    References listed on IDEAS

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