Template-Type: ReDIF-Paper 1.0
Title: Dominance or Maximin: How to Solve an English Auction
Author-Name: Ulrich Kamecke

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Classification-JEL: D44
Keywords: auction theory, dominance solvability, maximin criterion
Abstract: It is widely believed that the English auction is solved after the 
 dominated strategies are eliminated. This opinion is formally confirmed only 
 for one "ascending clock" auction and can not be generalized for most other 
 English auctions. In this paper I show that the formal argument which is 
 usually given in this context can not be derived from the dominance 
 criterion alone, but that it can be used to prove that competitive bidding 
 is the unique maximin strategy of a bidder who believes that his opponents 
 do not play dominated strategies. Since the competitive bids also form a 
 Nash equilibrium this result gives an unfamiliar but strong suppport for the 
 established solution.
Series: Sonderforschungsbereich 303, University of Bonn, Germany

Length: 18 pages
Creation-Date: 1993-10
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Handle: RePEc:bon:bonsfa:418