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Assignment#4ECO502

ConsidertheBayesianFIRSTpricesealedbidauctionwith2bidders,denotedbyPlayer1and
Player2.Lettheirprivatevaluationsv1,v2respectivelybeindependentanduniformly
distributedin[0,1].Answerthequestionsthatfollow
1. Whatisexpectedvalueofthesumofthevaluationsoftheplayers
2. Ifplayer2isbiddinghistruevaluationv2,whatisthebestresponsebidb1ofplayer1?
3. WhataretheBayesianNashequilibriumbidsb1,b2ofPlayers1,2respectivelyforthe
aboveauction
4. WhatistherevenuetotheauctioneerintheBayesiansealedbidfirstpriceauction
describedabove
5. Whatistheexpectedvalueoftherevenueoftheauctioneerintheauctiondescribed
above
ConsidertheBayesianSECONDpricesealedbidauctionwith2bidders,denotedbyPlayer1and
Player2.Lettheirprivatevaluationsv1,v2respectivelybeindependentanduniformly
distributedin[0,1].Answerthequestionsthatfollow
6. Ifplayer2isbiddingv2/2andv1>v2,whatisthecompletesetofbestresponsebidsb1
ofplayer1?
7. WhataretheBayesianNashequilibriumbidsb1,b2ofPlayers1,2respectivelyforthe
aboveauction
8. WhatistherevenuetotheauctioneerintheBayesiansealedbidsecondpriceauction
describedabove
9. Whatistheprobabilitythattheminimumofthetwovaluationsv1,v2liesinthe
infinitesimalinterval[v,v+dv]
10. Whatistheexpectedvalueoftherevenueoftheauctioneerintheauctiondescribed
above
11. WhatistherelationbetweentheexpectedrevenuetotheauctioneerintheBayesian
firstpriceandsecondpricesealedbidauctions
12. TheprinciplegoverningrevenuesinBayesianauctionsistermedas
ConsidertheBayesianALLPAYauctionwith2bidders,denotedbyPlayer1andPlayer2.Let
theirprivatevaluationsv1,v2respectivelybeindependentanduniformlydistributedin[0,1].
Answerthequestionsthatfollow
13. Considerbidb2=v2ofplayer2.Whatisthepayofftoplayer1asafunctionofhisbidb?
14. Considerbidb2=v2ofplayer2.Whatisthebestresponsebidbofplayer1?
15. WhataretheBayesianNashequilibriumbidsb1,b2ofPlayers1,2respectivelyforthe
aboveauction