A cool kid is willing to rename himself for a profit. He decides to auction off the naming right. Two bidders show interest. Their valuations for the naming right are independently and uniformly distributed over [0,100]. There are several possible ideas to design the auction. The auction runs as follows. Both bidders are invited to the same room; an auctioneer will start the auction with an initial price 0, and increase it by $1 every minute. The bidders are not allowed to say anything during the process, but they can walk out of the room at any moment. If one bidder walks out of the room when the price increases to p (the bidder does not need to pay), the remaining bidder will be awarded the naming right for a price of p. If both walk out when the price reaches p, the naming right is not assigned and the two bidders do not need to pay. What should the bidders do? Explain your answer.
A cool kid is willing to rename himself for a profit. He decides to auction
off the naming right. Two bidders show interest. Their valuations for the
naming right are independently and uniformly distributed over [0,100].
There are several possible ideas to design the auction. The auction runs as follows. Both bidders are invited to the same room; an auctioneer will start the auction with an initial
the two bidders do not need to pay.
What should the bidders do? Explain your answer.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
