a) If Alice submits a "qualifying" bid b, meaning a bid above the reserve price, how likely is she to win the auction?

b) For a given b, what is Alice's average surplus?

c)What is Alice's best strategy? Why?

1. Alice and Bob are bidding to take over a promising internet startup company owned by Claire. The company has the same value v to both Alice and Bob, but Alice doesn't know 11. Bob is more informed and has a very accurate estimate of 7), that we will assume to be exact. From Alice's point of view, 1; is random and is uniformly distributed between $0 and $10 million. Claire will run a secondprice auction with a reserve price of $4 million. Assume that Bob bids the true value 'u (so if v