Robust Competitive Auctions

This paper shows that a competitive distribution of auctions (Peters, 1997) is robust to the possibility of a seller's deviation not only to a direct mechanism, but rather to any arbitrary mechanism. It characterizes equilibrium allocations that are not only robust but also independent of market information transmission from buyers to sellers. For this type of equilibrium allocation, one only needs to design a market with a subset of direct mechanisms. In fact, a (constrained) ex-post efficient allocation is implemented by a market information-free robust equilibrium in a market with the set of second price auctions with reserve prices.