Bundling decisions for selling multiple objects. (English) Zbl 0941.91034

Chakraborty, Indranil

Econ. Theory 13, No. 3, 723-733 (1999).

Summary: Auctioneers often face the decision of whether to bundle two or more different objects before selling them. Under a Vickrey auction (or any other revenue equivalent auction form) there is a unique critical number for each pair of objects such that when the number of bidders is fewer than that critical number the seller strictly prefers a bundled sale and when there are more bidders the seller prefers unbundled sales. This property holds even when the valuations for the objects are correlated for a given bidder. The results have been proved using a mathematical technique of quantiles that can be extremely useful for similar analysis.

MSC:

91B26

Auctions, bargaining, bidding and selling, and other market models

Keywords:

auctions; bundling