Dominance or maximin: How to solve an English auction |
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| Authors: | Ulrich Kamecke |
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| Institution: | Humboldt-Universit?t zu Berlin, Lehrstuhl Wirtschaftspolitik, Spandauer Str. 1, D-10178 Berlin, Germany (e-mail: Kamecke@wiwi.hu-berlin.de), DE
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| 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.
Received May 1995/Final version May 1998 |
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| Keywords: | : Auction theory dominance solvability maximin criterion |
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