Answer Happy

Question 4 [15 marks] Suppose you are one of two bidders in a first price sealed bid auction for Super Bowl tickets. Each bidder (including you) knows its own value for the Super Bowl tickets, but not the values of the other bidders. All a bidder knows about the values of the other bidders is that they are uniformly distributed between $200 and $300. (1) Find the Bayesian Nash equilibrium of this first price sealed bid auction. (ii) Your value for the tickets is $280. What is the optimal bid that you should place? (Hint: You may copsider symmetric linear equilibria.)