Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217085 
Year of Publication: 
2020
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 15 [Issue:] 1 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2020 [Pages:] 199-237
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
Consider a first-price, sealed-bid auction with interdependent valuations and private budget constraints. Focusing on the two-bidder case, we identify new sufficient conditions for the existence of a symmetric equilibrium in pure strategies. In equilibrium, agents may adopt discontinuous bidding strategies resulting in a stratification of competition along the budget dimension. Private budgets can simultaneously lead to more aggressive bidding (a high-budget agent leverages his wealth to outbid rivals) and more subdued bidding (competition becomes less intense among bidders at distinct budget levels). The presence of budget constraints may lead to multiple symmetric equilibria in the first-price auction.
Subjects: 
First-price auction
budget constraints
interdependent values
JEL: 
D44
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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