Consider that there is one auctioneer who would like to sell one commodity and there are 2 individuals, 1 and 2. The auctioneer will apply the following tie-breaking rule: If there are multiple bidders who announce the highest bid, then select the bidder with the smallest index will be picked up as the winner. (For instance, let b(i) = b(j) . Then, i is the winner if and only if i < j.) Let each individual i's private value of the commodity, v(i), is given as: v(1) = $1600; v(2) = $2100. Considering a first-price auction, specify the set of Nash equilibria in this game.

Consider that there is one auctioneer who would like to sell one commodity and there are 2 individuals, 1 and 2. The auctioneer will apply the following tie-breaking rule: If there are multiple bidders who announce the highest bid, then select the bidder with the smallest index will be picked up as the winner. (For instance, let b(i) = b(j) . Then, i is the winner if and only if i < j.) Let each individual i's private value of the commodity, v(i), is given as: v(1) = $1600; v(2) = $2100. Considering a first-price auction, specify the set of Nash equilibria in this game.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 4MC

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