Symmetric Separating Equilibria in English Auctions

Abstract

We characterize the set of perfect Bayesian equilibria in symmetric separating strategies in Milgrom and Weber's (1982) model of English auctions. There is a continuum of such equilibria. The equilibrium derived by Milgrom and Weber is that in which bids are maximal. Only in the case of pure private values does a restriction to weakly undominated strategies select a unique equilibrium. This has important implications for empirical studies of English auctions, particularly outside the pure private values paradigm.

JEL Classification: D44, D82