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In prior literature, bidders' budget constraints have been shown to change revenue and efficiency rankings among auction formats. These results, however, are based on the implicit assumption that the nature of the budget constraint is unaffected by auction rules. I extend the standard symmetric model of auctions for a single good to include principals(More)
We perform laboratory experiments comparing auctions with endogenous budget constraints. A principal imposes a budget limit on a bidder (an agent) in response to a principal-agent problem. In contrast to the existing literature where budget constraints are exogenous, this theory predicts that tighter constraints will be imposed in first-price auctions than(More)
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