We consider ads for a keyword. The search engine offers 2 links. The first link has...

  

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We consider ads for a keyword. The search engine offers 2 links. The first link has a frequency of 100 clicks/day, and the second link a click frequency of 40 clicks/day. There are 3 bidders, Alice, Bob and Carol. Alice values the click at $10, Bob values the click at $5, and Carol values the click at $1. We run the VCG auction. 1. Find the outcome of the auction (who gets which position). 2. How much each bidder pays to the search engine per week? 3. Does one of the agents have an incentive to misreport their values? Explain. We consider ads for a keyword. The search engine offers 2 links. The first link has a frequency of 100 clicks/day, and the second link a click frequency of 40 clicks/day. There are 3 bidders, Alice, Bob and Carol. Alice values the click at $10, Bob values the click at $5, and Carol values the click at $1. We run the VCG auction. 1. Find the outcome of the auction (who gets which position). 2. How much each bidder pays to the search engine per week? 3. Does one of the agents have an incentive to misreport their values? Explain.