Auction Theory, 2nd Edition

Chapter | Nine

Efficiency and the

English Auction

The English auction is perhaps the most widely used auction format, and indeed,

it has many attractive features. First, from the perspective of the bidders, it is

strategically simple: Given the current price in the auction, each bidder need

only decide whether or not to drop out at that instant—and this is important

from a practical standpoint. The fact that the current price can be observed

means that bidders should stay in until the price is the same as their estimate

of the value, conditional on all available information. Second, from the per-

spective of the seller, we saw in Chapter 6 that in the symmetric model with

interdependent values and affiliated signals, the English auction outperforms

both ...