Dominance or maximin: How to solve an English auction

Ulrich Kamecke

International Journal of Game Theory, 1998, vol. 27, issue 3, 407-426

Abstract: It is widely believed that the English auction is solved after the dominated strategies are eliminated. This paper demonstrates that the dominance criterion is not very effective in many English auction models. To bid more than the true willingness to pay is dominated but a stronger solution concept is needed to deduce that the buyers increase the price in small steps up to their valuation. An iterated application of the dominance criterion does not solve the problem, but if it is assumed that the buyers use their maximin strategies the usual argument holds.

Keywords: Auction; theory; ·; dominance; solvability; ·; maximin; criterion (search for similar items in EconPapers)
Date: 1998-11-02
Note: Received May 1995/Final version May 1998
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Citations: View citations in EconPapers (9)

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