Question: Consider a third-price auction with N = 3 bidders. This is a sealed-bid auction in which the highest bidder wins and pays the third-highest bid.

 Consider a third-price auction with N = 3 bidders. This is

Consider a third-price auction with N = 3 bidders. This is a sealed-bid auction in which the highest bidder wins and pays the third-highest bid. There is no reserve price. For concreteness, you may assume that biidders' values are independently and uniformly distributed on [0, 100] (i.e., # ~"! U0, 100] for all bidders i = 1,..., N). True or False: All bidders have a (weakly) dominant strategy to bid their own values (i.e., the third price auction is strategy-proof). Provide a rigorous argument for your answer. {(Hint: This question can be answered with very little calculation.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!