- Question 6 25 Marks Consider The First Price Sealed Bid Auction With One Indivisible Object And N 1 Bid Ders Eac 1 (96.13 KiB) Viewed 45 times
Question 6 [25 marks] Consider the first-price sealed-bid auction with one (indivisible) object and n > 1 bid- ders. Each bidder i observes only her value vi, which is uniformly and independently distributed on [0, 1]. Each bidder i simultaneously submits her bid bi > 0. The bidder with the highest bid wins the object and pays the price equal to her own bid. If there are multiple bidders with the highest bid, one of them will be chosen as the winner with equal probability. The winner's payoff is vi — bị. If a player does not win, her payoff is zero. - Page 4 of 5 (a) Find a Bayesian Nash equilibirum. You need to show your work. [Hint: You can look at a scenario where each bidder i uses a strategy bi = av; where a > 0. [15 marks] (b) How does the equilibrium strategy depend on n? Discuss. [10 marks]