Consider a second-price auction to sell an object in which there are 5 bidders. Recall that in a second-price auction, the bidder who makes the highest bid wins but the amount he pays for the object is the second-highest bid made. Let the 5 bidders' valuations of the object be: v1-$10, v2-$15, v3-$20, v4-$25, v5-$30 Let the bids made by the five bidders be denoted by: (b1,b2,b3,b4,b5) is the case when (b1,b2.b3b4.b5)-(5,6,32.12,10) a Nash equilibrium? Explain why it is or it is not a Nash equilibrium
Consider a second-price auction to sell an object in which there are 5 bidders. Recall that in a second-price auction, the bidder who makes the highest bid wins but the amount he pays for the object is the second-highest bid made. Let the 5 bidders' valuations of the object be: v1-$10, v2-$15, v3-$20, v4-$25, v5-$30 Let the bids made by the five bidders be denoted by: (b1,b2,b3,b4,b5) is the case when (b1,b2.b3b4.b5)-(5,6,32.12,10) a Nash equilibrium? Explain why it is or it is not a Nash equilibrium
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:Consider a second-price auction to sell an object in which there are 5 bidders. Recall that in a second-price auction, the bidder who makes the
highest bid wins but the amount he pays for the object is the second-highest bid made.
Let the 5 bidders väluations of the object be: v1-$10, v2=$15. v3-$20, v4-$25, v5-$30
Let the bids made by the five bidders be denoted by: (b1,b2,b3,b4,b5)
Is the case when (b1,b2.b3.b4,b5)-(5,6,32,12,10) a Nash equilibrium? Explain why it is or it is not a Nash equilibrium.
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