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Questions › DSE › DSE 2017 › Q9
2 marks, −0.666666666666667Game Theory › Game theory and strategic behaviour › Incomplete information and auctionsModerateabout 3 min

DSE 2017 Question 9: Game theory and strategic behaviour

In the sealed-bid auction where the highest bidder wins and pays min⁡{b1,b2}\min\{b_1,b_2\}min{b1​,b2​}, with each valuation viv_ivi​ private to bidder iii, if bib_ibi​ is the optimal bid for bidder iii, then

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In the sealed-bid auction where the highest bidder wins and pays min {b₁,b₂}, with each valuation vᵢ private to bidder i, if bᵢ is the optimal bid for bidder i, then (A) it varies with bidder i 's belief about the other bidder's valuation (B) it varies with bidder i 's belief about the other bidder's bid (C) both (A) and (B) (D) neither (A) nor (B)

Also written as: In the sealed-bid auction where the highest bidder wins and pays min {b_1,b_2}, with each valuation v_i private to bidder i, if b_i is the optimal bid for bidder i, then

Game theory and strategic behaviour has come up 61 times in 6 exams since 2008.

What this question tests

This question is on Incomplete information and auctions, part of Game theory and strategic behaviour in Game Theory.

Games where players do not know each other's types or values.

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Practise Game theory and strategic behaviourMore on Incomplete information and auctions

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Question from the DSE 2017 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.