Auctions vs. fixed pricing: Competing for budget constrained buyers

Auctions vs. fixed pricing: Competing for budget constrained buyers

We investigate price mechanism selection in a setting where sellers compete for budget constrained buyers by adopting either …xed pricing or auctions (…rst or second price). We show that …rst and second price auctions are payo¤ equivalent when some bidders are …nancially constrained, so sellers are indi¤erent to adopt either format. We fully characterize possible equilibria and show that if the...

Optimal auctions with financially constrained buyers

• 1 item and N bidders • private valuations: vi ∈ {ǫ, 2ǫ, . . . ,mǫ} • private budgets: bi st b1 < b2 < · · · < bk • private types: t = (v, b) • type distribution: t ∼ π density function: fb(v) distribution function: Fb(v) • monotone hazard rate: (v, b) ≥ (v, b) → 1−Fb(v) fb(v) ≥ 1−Fb′ (v ) f b′ (v ′) • direct mechanism: M = (a, p) allocation probability a(t) (expected) payment p(t) Assumptions...

Approximation Algorithms for Budget-Constrained Auctions

Keyword Auctions with Budget-constrained Bidders

We study a keyword auction model where bidders have constrained budgets. In the absence of budget constraints, Edelman, Ostrovsky, and Schwarz (2007) and Varian (2007) analyze “locally envy-free equilibrium” or “symmetric Nash equilibrium” bidding strategies in generalized second-price (GSP) auctions. However, bidders often have to set their daily budgets when they participate in an auction; on...

Multiple-Object Auctions with Budget Constrained Bidders

A seller with two objects faces a group of bidders who are subject to budget constraints. The objects have common values to all bidders, but need not be identical and may be either complements or substitutes. In a simple complete information setting we show: (1) if the objects are sold by means of a sequence of open ascending auctions, then it is always optimal to sell the more valuable object ...