High bids and broke winners

• 成果类型: Article
• 署名作者: Zheng, CZ
• 署名单位: Northwestern University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1006/jeth.2000.2715
• 发表日期: 2001
• 页码: 129-171
• 关键词: auction; budget; default; spectrum auction; C-block auction; fcc; PCS

摘要

This paper analyzes auctions where budget-constrained bidders have options to declare bankruptcy. It predicts a bidding equilibrium that changes discontinuously in a borrowing rate available to bidders. When the borrowing rate is above a threshold, high-budget bidders win, and the likelihood of bankruptcy is low. When the borrowing rate is below the threshold, the winner is the most bud.-et-constrained bidder and is most likely to declare bankruptcy. This result explains the high bids and broke winners anomaly in the C-Block FCC spectrum auction. Based on its equilibrium analysis, the paper proves that a seller can profit from offering to finance the highest bidder at a below-market interest rate, even with default risk. (C) 2001 Academic Press.