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Can anyone explain this please? With steps! - Example: Use the RET to find the equilibrium bidding strategy for the first-price, sealed-bid auction. We know
Can anyone explain this please? With steps!
- Example: Use the RET to find the equilibrium bidding strategy for the first-price, sealed-bid auction. We know that in a second-price, sealed-bid auction, the expected surplus to a buyer with valuation v is: S(v)=NvN Then according to the RET: S(v)NvNNv=[F(v)]N1v[F(v)]N1b(v)=vN1vvN1b(v)=vb(v) which implies: b(v)=vNv as we assumed above. - Example: Use the RET to find the equilibrium bidding strategy for the first-price, sealed-bid auction. We know that in a second-price, sealed-bid auction, the expected surplus to a buyer with valuation v is: S(v)=NvN Then according to the RET: S(v)NvNNv=[F(v)]N1v[F(v)]N1b(v)=vN1vvN1b(v)=vb(v) which implies: b(v)=vNv as we assumed aboveStep by Step Solution
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