Optimal auctions with financially constrained bidders

Arbeitspapier

We consider an environment where potential buyers of an indivisible good have liquidity constraints, in that they cannot pay more than their `budget' regardless of their valuation. A buyer's valuation for the good as well as her budget are her private information. We derive constrained-e±cient and revenue maximizing auctions for this setting. In general, the optimal auction requires `pooling' both at the top and in the middle despite the maintained assumption of a monotone hazard rate. Further, the auctioneer will never ¯nd it desirable to subsidize bidders with low budgets.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 1471

Classification and Topics

• Classification: Wirtschaft ; Auctions
• Subject: optimal auction ; budget constraints ; Auktionstheorie ; Budgetrestriktion ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pai, Mallesh ; Vohra, Rakesh V.
• Event: Veröffentlichung
• (who): Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
• (where): Evanston, IL
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/31205
• Last update: 10.03.2025, 11:43 AM CET