Auction winners don't actually need to know when other people stop bidding to win at the best price.
April 24, 2026
Original Paper
A Very Simple Bidding Strategy in a Common-Value English Auction
SSRN · 6629266
The Takeaway
Optimal bidding in common-value English auctions is much simpler than decades of economic theory suggested. Traditional models argued that bidders must carefully watch when rivals drop out to update their own estimates of an item's value. This new research proves that a simple strategy allows bidders to reach the same result without any of that complex information. By ignoring the behavior of others, a bidder can still avoid the winner's curse of overpaying. This simplifies the logic required for everything from online art sales to multi-billion dollar government spectrum auctions.
From the abstract
I derive the optimal bidding strategy in a common-value English auction (dis- tinct from a button auction where the strategy has long been known). The optimal bidding strategy does not require the bidders to observe when other bidders dropout, which is ap- pears to contradict previous arguments made by Milgrom and others. The simple strategy needed for an English auction where bidding is sequential may provide a partial explanation for why it is more common than a button auction where the auctio