- Question B1 Consider A First Price Auction Between Two Bidders Each Bidder S Private Value For The Auction Is Independe 1 (46.74 KiB) Viewed 86 times
Question B1 Consider a first-price auction between two bidders. Each bidder's private value for the auction is independent and uniformly distributed over [0, 1]. a) Derive bidder one's probability of winning the auction. Fully explain all steps. [25 marks] b) How would your answer to part (a) change if there was three bidders? Fully explain your answer. [10 marks] c) Write down bidder one's expected payoff and derive her optimal bid as a function of her value. Fully explain all steps. Provide an intuitive interpretation of your answer. [25 marks) d) Graph bidder one's expected payoff from part (c) and identify the optimal bid on this graph (10 marks]