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http://hdl.handle.net/10419/31205
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| Title: | | Optimal auctions with financially constrained bidders  |
| Authors: | | Pai, Mallesh Vohra, Rakesh V. |
| Issue Date: | | 2008 |
| Series/Report no.: | | Discussion paper // Center for Mathematical Studies in Economics and Management Science 1471 |
| Abstract: | | 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. |
| Subjects: | | optimal auction budget constraints |
| JEL: | | D44 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Discussion Papers, Kellogg School of Management, Northwestern University
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