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first price auction (b) [4 points] Now consider a first-price auction. Suppose that bidder 2 will bid the square root of her valuation: b2 =

first price auction

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(b) [4 points] Now consider a first-price auction. Suppose that bidder 2 will bid the square root of her valuation: b2 = Vv2. What is bidder I's expected- payoff-maximizing bidding strategy, bi(v1)? (Hint: you may find it useful to recall that if f(x) = ax3, then f'(x) = 3ax2.) 300 ( V1 - 6)

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