24.10 Everyday and Business Application: Auctions: Many items are sold not in markets but in auctions where bidders do not know how much others value the object that is up for bid. We will analyze a straightforward setting like this here, which technically means we are analyzing (for much of this exercise) an incomplete information game of the type covered in Section B of the chapter. The underlying logic of the exercise is, however, sufficiently transparent for you to be able to attempt the exercise even if you have not read Section B of the chapter. Consider the following, known as a second-price sealed bid auction. In this kind of auction, all people who are interested in an item x submit sealed bids (simultaneously). The person whose bid is the highest then gets the item x at a price equal to the second highest bid.