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Simultaneous Ascending Auctions with Complementarities and Known Budget Constraints

We study simultaneous ascending auctions of two identical objects when bidders are financially constrained and their valuations exhibit complementarities. We assume the budget constraints are known but the values for individual objects are private information, and characterize noncollusive equilibri...

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Bibliographic Details
Published in:Economic theory 2009-01, Vol.38 (1), p.105-124
Main Authors: Brusco, Sandro, Lopomo, Giuseppe
Format: Article
Language:English
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Summary:We study simultaneous ascending auctions of two identical objects when bidders are financially constrained and their valuations exhibit complementarities. We assume the budget constraints are known but the values for individual objects are private information, and characterize noncollusive equilibria. Equilibrium behavior is affected by the exposure problem. Bidders with higher budgets are more reluctant to bid, because opponents with lower budgets may end up pursuing a single object, thus preventing the realization of complementarities. Therefore poor bidders may win both objects when they do not have the highest valuation.
ISSN:0938-2259
1432-0479
DOI:10.1007/s00199-007-0217-8