Question
Suppose you are trying to auction your old smartphone on ebay.com. Currently, you know that using the standard Vickrey auction you will generate an expected
Suppose you are trying to auction your old smartphone on ebay.com. Currently, you know that using the standard Vickrey auction you will generate an expected revenue of 100 dollars. However, if you were to hold an optimal auction your expected revenue would increase to 105 dollars. Unfortunately, ebay will not let you set a reserve price for smartphone. As you go to checkout, you notice that ebay will advertise your smartphone for you for only five dollars. Assume that at least one more person would join your auction on ebay if you were to advertise. Should you spend the extra money on advertisement? Prove your answer
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