You are a risk-neutral bidder. You are participating in auction and you can safely assume that other bidders are playing equilibrium strategies.

Part a (10 points)

Suppose you are in a private-value setting (i.e., the other people's value for the good does not tell you anything about how much the good is worth to you.) Your best (unbiased but noisy) estimate of how much the good is worth to you is x. Suppose you are participating in a second-price sealed-bid auction. Should you bid less than x, exactly x, or more than x (or does the answer depend on something I have not told you)? If the number of other bidders increases, should your bid increase, decrease, or stay the same (or does the answer depend on something I have not told you)?

Part b (10 points)

Suppose you are in a private-value setting (i.e., the other people's value for the good does not tell you anything about how much the good is worth to you.) Your best (unbiased but noisy) estimate of how much the good is worth to you is x. Suppose you are participating in a rst-price sealed-bid auction. Should you bid less than x, exactly x, or more than x (or does the answer depend on something I have not told you)? If the number of other bidders increases, should your bid increase, decrease, or stay the same (or does the answer depend on something I have not told you)?

Part c (10 points)

Suppose you are in a common-value setting (i.e., the other people's value for the good is the same as yours.) Your best (unbiased but noisy) estimate of how much the good is worth is x. Suppose you are participating in a second-price sealed-bid auction. Should you bid less than x, exactly x, or more than x (or does the answer depend on something I have not told you)? If the number of other bidders increases, should your bid increase, decrease, or stay the same (or does the answer depend on something I have not told you)?