Multiple-Object Auctions with Budget Constrained Bidders
A seller with two objects faces a group of bidders who are subject to budget constraints. The objects have common values to all bidders, but need not be identical and may be either complements or substitutes. In a simple complete information setting we show: (1) if the objects are sold by means of a sequence of open ascending auctions, then it is always optimal to sell the more valuable object first; (2) the sequential auction yields more revenue than the simultaneous ascending auction used recently by the FCC if the discrepancy in the values is large, or if there are significant complementarities; (3) a hybrid simultaneous- sequential form is revenue superior to the sequential auction; and (4) budget constraints arise endogenously.
|Date of creation:||05 May 1998|
|Date of revision:||26 Jul 1999|
|Note:||Type of Document - SciWord-LaTex; prepared on IBM PC ; to print on HP Laserjet 4; pages: 34; figures: None|
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