Optimality and robustness of the English auction (Q5954065): Difference between revisions

In \textit{P. R. Milgrom} and \textit{R. J. Weber}'s [``A theory of auctions and competitive bidding'' Econometrica 50, 1089-1122 (1982; Zbl 0487.90017)] ``general symmetric model'', under a few additional regularity conditions, the English auction maximizes the seller's expected profit within the class of all posterior-implementable trading procedures and fails to do so among all interim incentive-compatible procedure in which ``losers do not pay''. The author ascertains that these results suggest that appropriate notions of robustness and simplicity which imply the optimality of the English auction for a risk-neutral seller must impose ``bargaining-like'' features on the set of feasible trading mechanisms.