(i) A federal agency needs to distribute essential medical equipment, such as ventilators, to various US...

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(i) A federal agency needs to distribute essential medical equipment, such as ventilators, to various US states during the pandemic. Because it is difficult to accurately assess need and priority across states, the federal agency commissioner instead decides to run an auction for each essential item with the various states as participants. Hint: Assume that eventually the federal agency will have enough items to meet total need. Choose an auction strategy that encourages states to only bid their true need. Set up the auction, valuations and payoffs, and explain how this encourages truthful bidding. (ii) Are there any downsides to your auction strategy? Propose one method to fix some of the problems you have identified. (i) A federal agency needs to distribute essential medical equipment, such as ventilators, to various US states during the pandemic. Because it is difficult to accurately assess need and priority across states, the federal agency commissioner instead decides to run an auction for each essential item with the various states as participants. Hint: Assume that eventually the federal agency will have enough items to meet total need. Choose an auction strategy that encourages states to only bid their true need. Set up the auction, valuations and payoffs, and explain how this encourages truthful bidding. (ii) Are there any downsides to your auction strategy? Propose one method to fix some of the problems you have identified.