(Second Price Auction) There are two bidders bidding for one object. Each one's value of the object is his private information and independent of the other's, with their values at v1=800 and v2=850. They simultaneously submit their bids b1 and b2. The one with the higher bid wins the auction but pays the loser's bid (the second highest price).

Find bidder 2's dominant bidding strategy and his consumer surplus at the equilibrium.

a.

None of the other choices are correct.

b.

Bidder 2's dominant strategy is to bid b2=800.01, and his consumer surplus at the equilibrium is 0.01.

c.

Bidder 2's dominant strategy is to bid b2=850, and his consumer surplus at the equilibrium is 0.

d.

Bidder 2's dominant strategy is to bid b2=800, and his consumer surplus at the equilibrium is 0.

e.

Bidder 2's dominant strategy is to bid b2=850, and his consumer surplus at the equilibrium is 50.