Multiple Object Auctions with Budget Constrained Bidders

37 Pages Posted: 7 Aug 2000

See all articles by Jean-Pierre Benoit

Jean-Pierre Benoit

London Business School - Department of Economics

Vijay Krishna

Penn State University

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Abstract

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.

Suggested Citation

Benoit, Jean-Pierre and Krishna, Vijay, Multiple Object Auctions with Budget Constrained Bidders (Undated). Available at SSRN: https://ssrn.com/abstract=223868 or http://dx.doi.org/10.2139/ssrn.223868

Jean-Pierre Benoit

London Business School - Department of Economics ( email )

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Vijay Krishna (Contact Author)

Penn State University ( email )

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