home6m - 3. Why does the average revenue of the...

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Homework 6 1. Consider an auction with two bidders. Prior to the auction, each bidder i observes her private value V i that is independently and uniformly distributed on the interval [0 , 1]. Describe the outcomes in the equilibria in the English, Dutch, first-price, and second-price auctions (i) if V 1 = 0 . 4 and V 2 = 0 . 3; (ii) if V 1 = 0 . 8 and V 2 = 0 . 9. 2. Problem 2 on p. 372 in the book.
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Unformatted text preview: 3. Why does the average revenue of the second-price auction increase when the number of bidders increase? 4. Why does the average revenue of the second-price auction increase when the seller sets a small reservation price? Explain why the revenue equivalence principle fails in this case...
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