a cu a e paymen s to supp iers in a Vic ey auction. Q4 Equilibrium Analysis of the Uniform Price auction Consider a uniform price (in which the highest-rejected bid sets the price) auction with two bidders. The auctioneer oifers two identical units of the same product for sale. Each bidder values each unit of the product at $10, so winning two units at per unit price 13 generates payoff of 20 7 2p and Winning one unit at per unit price 12 generates 10 7 p' This is a complete information auction game. Let's denote (rhyi) (where a; 2 yl: ) a bidding strategy of bidder i Where {L'i is its declared marginal value for the rst item, and yi is its declared marginal value for the second item' Suppose that bidders are restricted to rising integers for their marginal values, so both rhyi must be integers. (a) (Warmup) Suppose that ($1 : 8,y1 : 4). Write down and draw the corresponding demand curve for bidder 1. It is well-known that bidders have a weakly dominant strategy in the uniform-price auctions with the highestrejected bid pricing rule. (b) Write down the corresponding restrictions on (.151, m) and ($2,912). (Hint: state restrictions\" in terms of equalities and/07' inequalities). Page