| Article ID: | iaor2009745 |
| Country: | United Kingdom |
| Volume: | 56 |
| Issue: | 1 |
| Start Page Number: | 113 |
| End Page Number: | 142 |
| Publication Date: | Mar 2008 |
| Journal: | Journal of Industrial Economics |
| Authors: | Brusco Sandro, Lopomo Giuseppe |
| Keywords: | auctions |
The possibility, even if arbitrarily small, of binding budget constraints in simultaneous ascending bid auctions induces strategic demand reduction and generates significant inefficiencies. Under mild conditions on the distributions of the bidders' values, unconstrained bidders behave as if they were liquidity constrained, even as the probability that bidders are budget constrained goes to zero.