Review of Economic Design

, Volume 9, Issue 2, pp 127-143

First online:

Implementation of the revenue-maximizing auction by an ignorant seller

  • Bernard CaillaudAffiliated withPSE (Paris-Jourdan Sciences Economiques, joint research unit CNRS - EHESS - ENPC - ENS)CEPR Email author 
  • , Jacques RobertAffiliated withDepartment of Information Technology, HEC MontréalCIRANO

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In a general auction framework with independent private values, we propose a game, with a simple economic interpretation, that allows to implement the revenue-maximizing auction outcome when the seller ignores the distributions of the different bidders’ valuations. In this detail-free implementation procedure, an ascending-price contest is organized and the winner volunteers a payment to the seller; this payment can then be challenged by another bidder who knows the distribution of the winner’s valuation.