2. Pat is selling his house in a second price sealed bid auction. That is, a written bid is submitted, the highest bid wins the item but the price paid is the second-highest bid. There are two bidders, Alex and Bert, who have valuations of £1.1lm and £1.2m respectively. a) Show that there is an equilibrium where each bidder bids his or her valuation. b) What price is the house is sold for?

2. Pat is selling his house in a second price sealed bid auction. That is, a written bid is submitted, the highest bid wins the item but the price paid is the second-highest bid. There are two bidders, Alex and Bert, who have valuations of £1.1lm and £1.2m respectively. a) Show that there is an equilibrium where each bidder bids his or her valuation. b) What price is the house is sold for?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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a) Consider that 2 agents make up the demand side of a market. Person A's marginal benefits are MBA 60-0.25Q, and person B's marginal benefits are MBB 60 GB Find market-level marginal benefits
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