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please explain why b1 is at least 9.5 I thought b1 is at least 10 which is b2. 2. (24 pts.) Four bidders/ advertisers are

please explain why b1 is at least 9.5

I thought b1 is at least 10 which is b2.

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2. (24 pts.) Four bidders/ advertisers are competing for 3 link positions for some keyword in a PPC auction. Each bidder's value per click is 71 = 13, 72 = 9, 73 = 6, 74 = 3. Assume that the mth link generates 120 m clicks per day for m = 1, 2, 3. Answer the following questions. (4 pts. ) Find the symmetric Nash equilibrium that is most prof- itable for the seller. Answer. The most profitable NE can be obtained by solving the following system of equations. (6 - b4) 40 = 0 (9 - b3) 60 = (9 - b4) 40 (13 - b2) 120 = (13 - b3) 60 Hence the most profitable NE is (b), b, b3, b*) = (b, 10, 7, 6), where bi is any number strictly above 9.5

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