Simultaneous Ascending Auctions with Complementarities and Known Budget Constraints∗

We study simultaneous ascending auctions of identical objects when bidders are financially constrained and their valuations exhibit complementarities. We assume the budget constraints are known but the values for individual objects are private information, and characterize noncollusive equilibria. The equilibria exhibit the exposure problem. The bidder with the highest budget is more reluctant to bid, because the bidder with the lowest budget may end up pursuing only one object, thus preventing the realization of complementarities. In some states of the world both objects are assigned to the ‘poorer’ bidder although that bidder has a lower valuation. JEL classification number: D44 [H]