Question: Consider a first - price sealed - bid auction with three bidders: Bidder 1 , bidder 2 , bidder 3 , who bid for one
Consider a firstprice sealedbid auction with three bidders: Bidder bidder bidder who bid for
one object. A bidders valuation can be with probability
; with probability
or with a
probability of
Bidders valuations are private and independently distributed. The auction rules
state that the minimum acceptable bid is
Let be Bidder s bidding strategy as a function of own valuation ;
Let be Bidder s bidding strategy as a function of own valuation ;
Let be Bidder s bidding strategy as a function of own valuation ;
We are looking at equilibrium strategies which have the following properties:
All players bidding strategies are the same:
Bids are strictly increasing in valuation:
No bidder pays more than their valuation: ; ;
Bids can only be positive integers.
Answer QQ based on the setup above.
Q points Calculate the probability of receiving the object for a bidder with valuation
valuation
valuation
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