Optimality and Robustness of the English Auction

In Milgrom and Weber’s (1982) “general symmetric model,” under few additional regularity conditions, the English auction maximizes the seller’s expected profit within the class of all posteriorimplementable trading procedures, and fails to do so among all interim incentive-compatible procedures in which ‘losers do not pay.’ 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 to the set of feasible trading mechanisms. Journal of Economic Literature Classification Numbers: D44, D82. Direct correspondence to: Giuseppe Lopomo, Fuqua School of Business, Duke University, Durham NC27708-0120.