Menu Auctions with Demand Uncertainty.

We apply a Bernheim-Whinston (1986) type mechanism to a situation where a single buyer with uncertain demand wishes to buy from a small number of suppliers. We let suppliers bid a payment contingent on own quantity supplied, and another payment contingent on the realization of total demand. We show that there is a unique equilibrium which is also efficient. This equilibrium is equivalent to the one under the ‘truthful bids’ restriction used in the model without uncertainty in Bernheim-Whinston (1986).