Consider the independent private values model with N possibly asymmetric bidders. Suppose we restrict attention to...
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Consider the independent private values model with N possibly asymmetric bidders. Suppose we restrict attention to efficient individually rational, incentive-compatible direct selling mechanisms; i.e., those that always assign the object to the bidder who values it most. (a) What are the probability assignment functions? (b) What then are the cost functions? (c) What cost functions among these maximise the seller's revenue? (d) Conclude that among efficient individually rational, incentive-compatible direct selling mech- anisms, a second-price auction maximises the seller's expected revenue. (What about the other three standard auction forms?) Consider the independent private values model with N possibly asymmetric bidders. Suppose we restrict attention to efficient individually rational, incentive-compatible direct selling mechanisms; i.e., those that always assign the object to the bidder who values it most. (a) What are the probability assignment functions? (b) What then are the cost functions? (c) What cost functions among these maximise the seller's revenue? (d) Conclude that among efficient individually rational, incentive-compatible direct selling mech- anisms, a second-price auction maximises the seller's expected revenue. (What about the other three standard auction forms?)
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In the independent private values IPV model each bidders valuation for the object is privately known to them and follows a probability distribution In the context of efficient individually rational in... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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