Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150274
Authors: 
Burkett, Justin
Year of Publication: 
2016
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 11 [Year:] 2016 [Issue:] 1 [Pages:] 133-155
Abstract: 
I study a principal's optimal choice of constraint for an agent participating in an auction (or auction-like allocation mechanism). I give necessary and sufficient conditions on the principal's beliefs about the value of the item for a simple budget constraint to be the optimal contract. The results link the observed use of budget constraints to their use in models incorporating budget-constrained bidders. Other implications of the model are that a general revenue equivalence result applies and that the optimal auction with budget-constrained bidders has a standard solution analogous to the one for classic models.
Subjects: 
Budget constraints
auctions
mechanism design
JEL: 
D44
D47
D82
D86
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Article

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