Mechanism design with budget constraints and a population of agents

Richter, Michael

doi:10.1016/j.geb.2019.02.009

Cited by 18 publications

(12 citation statements)

References 22 publications

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“…In this first branch of literature, the two closest papers to the current paper are Che et al (2013) and Richter (2015). In Che et al (2013) and Richter (2015), like in this paper, there is a unit mass of a continuum of agents and a limited supply of goods. In Richter (2015) agents have linear preferences for an unlimited supply of the goods.…”

Section: Related Literaturementioning

confidence: 89%

Mechanism Design with Financially Constrained Agents and Costly Verification

2017

SSRN Journal

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A principal wishes to distribute an indivisible good to a population of budget-constrained agents. Both valuation and budget are an agent's private information. The principal can inspect an agent's budget through a costly verification process and punish an agent who makes a false statement. I characterize the direct surplus-maximizing mechanism. This direct mechanism can be implemented by a two-stage mechanism in which agents only report their budgets. Specifically, all agents report their budgets in the first stage. The principal then provides budgetdependent cash subsidies to agents and assigns the goods randomly (with uniform probability) at budget-dependent prices. In the second stage, a resale market opens, but is regulated with budget-dependent sales taxes. Agents who report low budgets receive more subsidies in their initial purchases (the first stage), face higher taxes in the resale market (the second stage) and are inspected randomly. This implementation exhibits some of the features of some welfare programs, such as Singapore's housing and development board.

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Section: Related Literaturementioning

confidence: 89%

Mechanism Design with Financially Constrained Agents and Costly Verification

2017

SSRN Journal

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“…The auction design problem following Myerson () that incorporates budget constraints is particularly challenging and has been considered under various guises (Laffont and Robert 1996, Monteiro and Page 1998, Che and Gale 1999, , Maskin 2000, Malakhov and Vohra 2008, Pai and Vohra 2014, Kojima 2014, Baisa 2018, Boulatov and Severinov 2018, Carbajal and Mu'alem 2018, Richter 2019). Auction design with budgets has also spurred an interest among computer scientists .…”

Section: Related Literaturementioning

confidence: 99%

First‐price auctions with budget constraints

Kotowski

2020

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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 that result 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.

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“…The auction design problem following Myerson (1981) that incorporates budget constraints is particularly challenging and has been considered under various guises (Laffont and Robert 1996, Monteiro and Page 1998, Che and Gale 1999, 2000, Maskin 2000, Malakhov and Vohra 2008, Pai and Vohra 2014, Kojima 2014, Baisa 2018, Boulatov and Severinov 2018, Carbajal and Mu'alem 2018, Richter 2019. Auction design with budgets has also spurred an interest among computer scientists.…”

Section: Related Literaturementioning

confidence: 99%

First-Price Auctions with Budget Constraints

Kotowski

2019

SSRN Journal

View full text Add to dashboard Cite

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 that result 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.

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Mechanism design with budget constraints and a population of agents

Cited by 18 publications

References 22 publications

Mechanism Design with Financially Constrained Agents and Costly Verification

Mechanism Design with Financially Constrained Agents and Costly Verification

First‐price auctions with budget constraints

First-Price Auctions with Budget Constraints

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