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5. Consider a seller who must sell a single private value good. There are two potential buyers, each with a valuation that can take on
5. Consider a seller who must sell a single private value good. There are two potential buyers, each with a valuation that can take on one of three values, 6, E {0, 1, 2}, each value occurring with an equal probability of g. The players' values are independently drawn. The seller will offer the good using a secondprice sealedbid auction, but he can set a \"reserve price\" of r 2 O that modies the rules of the auction as follows. If both bids are below r then neither bidder obtains the good and it is destroyed. If both bids are at or above '1" then the regular auction rules prevail. If only one bid is at or above 7" then that bidder obtains the good and pays 7" to the seller. a. Is it still a weakly dominant strategy for each player to bid his valuation when 7" > 0? b. What is the expected revenue of the seller when r = 0 (no reserve price)? c. What is the expected revenue of the seller when r = 1? d. What is the expected revenue of the seller when r = 2? e. What is the optimal reserve price 1" for the seller
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