Menu Auctions with Non-Transferable Utilities and Budget Constraints
This paper extends Bernheim and Whinston's (1986) menu auction model under transferable utilities to a framework with non-transferable utilities and budget constraints. Under appropriate definitions of equilibria, it is shown that every truthful Nash equilibrium (TNE) is a coalition-proof Nash equilibrium (CPNE) and that the set of TNE payoffs and the set of CPNE payoffs are equivalent, as in a transferable utility framework. The existence of a CPNE is assured in contrast with the possible non-existence of Nash equilibrium under the definition by Dixit, Grossman, and Helpman (1997). Moreover, the set of CPNE payoffs is equivalent to the bidder-optimal weak core.
|Date of creation:||20 Oct 2011|
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- Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997.
"Common Agency and Coordination: General Theory and Application to Government Policy Making,"
Journal of Political Economy,
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"Putting Auction Theory to Work,"
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"Ascending Auctions with Package Bidding,"
The B.E. Journal of Theoretical Economics,
De Gruyter, vol. 1(1), pages 1-44, August.
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