On the failure of the linkage principle with financially constrained bidders

• 成果类型: Article
• 署名作者: Fang, HM; Parreiras, SO
• 署名单位: Yale University; University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/S0022-0531(03)00033-4
• 发表日期: 2003
• 页码: 374-392
• 关键词: linkage principle; auctions; financial constraints

摘要

This paper provides a class of examples of two-bidder common value second price auctions in which bidders may be financially constrained and the seller has access to information about the common value. We show that the seller's expected revenue under a revelation policy may be lower than that under a concealing policy. The intuition for the failure of the linkage principle is as follows. In the presence of financial constraints, the bidders' upward response in their bids to the seller's good signals is limited by their financial constraints, while their downward response to bad signals is not. (C) 2003 Elsevier Science (USA). All rights reserved.