Econ 177
Sample Questions Part II
1. Consider a secondprice auction with a single private value bidder who
value is drawn from the uniform distribution on [0,100]. You are the
seller.
(a) Compute the optimal reserve price assuming your value for the
item is 0.
(b) Compute the optimal reserve price assuming your value for the
item is 40.
(c) Would the reserve prices you calculated in parts (b) and (c) in
crease, decrease, or stay the same if there were 5 bidders with
private values that are drawn independently from the uniform
distribution on [0,1].
2. Discuss how the data from our reserveprice experiment compared to
the theoretical predictions we derived in class.
Consider both initial
behavior and learning. Be sure to say something about the saliency of
the different treatments and whether this seemed to matter.
3. Consider a common value auction setting where bidder
i
’s signal of the
value
v
of the item being auctioned is given by
s
i
=
v
+
e
i
where
e
i
is
a random number drawn from a distribution with zero expected value.
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 Fall '09
 GARRATT
 Game Theory, Auction, symmetric Nash equilibrium, optimal reserve price

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