Question: Suppose we have an auction with two bidders whose valuations are independent and distributed according to the Exponential distribution with mean 1, Exp(1). (a) Hold

Suppose we have an auction with two bidders whose valuations are independent and distributed according to the Exponential distribution with mean 1, Exp(1).

(a) Hold a Second Price Auction and find the expected Revenue and expected social welfare.

(b) Design and describe a revenue maximizing auction. What are the reserve prices for both bidders.

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