Two buyers bid for a single object in an auction. Each buyer's valuation is private information, drawn independently from the distribution. The auction rule lets the highest bidder take the object by paying the lowest bid. Suppose the buyers bid truthfully (each bid equals her valuation). Find the expected revenue of the auction.
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Two buyers bid for a single object in an auction. Each buyer's valuation is private information, drawn independently from the Uniform[0,1] distribution. The auction rule lets the highest bidder take the object by paying the lowest bid. Suppose the buyers bid truthfully (each bid equals her valuation). Find the expected revenue of the auction. (A) 1/3 (B) 2/3 (C) 1/2 (D) 1
Game theory and strategic behaviour has come up 61 times in 6 exams since 2008.
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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Question from the DSE 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.