Consider a first-price sealed bid auction of a single object with two bidders j = 1,2 and no reservation price. Bidder 1′s valuation is v1 = 2, and bidder 2′s valuation is Consider the following auction. Two buyers (i = 1,2) have valuations uni- formly distributed over [0,1]. The good is assigned to the highest bid, but the winner pays the average of his bid and the losing bid. Use the revenue equivalence principle to derive the optimal strategies in a symmetric equilibrium. Assume that the optimal bid is a linear function of the buyer’s valuation: b(vi) = cvi where c is a real number.In the event of a tie, the object is awarded by a flip of a fair coin
Consider a first-price sealed bid auction of a single object with two bidders j = 1,2 and no reservation price. Bidder 1′s valuation is v1 = 2, and bidder 2′s valuation is Consider the following auction. Two buyers (i = 1,2) have valuations uni- formly distributed over [0,1]. The good is assigned to the highest bid, but the winner pays the average of his bid and the losing bid. Use the revenue equivalence principle to derive the optimal strategies in a symmetric equilibrium. Assume that the optimal bid is a linear function of the buyer’s valuation: b(vi) = cvi where c is a real number.In the event of a tie, the object is awarded by a flip of a fair coin
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter18: Auctions
Section: Chapter Questions
Problem 6MC
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Consider a first-price sealed bid auction of a single object with two bidders j = 1,2 and no reservation price. Bidder 1′s valuation is v1 = 2, and bidder 2′s valuation is Consider the following auction. Two buyers (i = 1,2) have valuations uni- formly distributed over [0,1]. The good is assigned to the highest bid, but the winner pays the average of his bid and the losing bid. Use the revenue equivalence principle to derive the optimal strategies in a symmetric equilibrium. Assume that the optimal bid is a linear function of the buyer’s valuation: b(vi) = cvi where c is a real number.In the event of a tie, the object is awarded by a flip of a fair coin
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