Q3 Ascending-bid auction 3 Points There are 4 buyers bidding for one item in an ascending-bid auction. Assume that buyer valuations follow a uniform(0, 1) distribution. Suppose that the valuations of the 4 buyers are: v1 = 0.1542 v2 = 0.8246 v3 = 0.4936 v4 = 0.9565 Assume that each buyer bids according to the symmetric equilibrium bidding strategy. Round all numeric answers to at least three decimals. Q3.1 1 Point Which buyer wins the auction? 1 2 3 4 Q3.2 1 Point What price does the winning bidder pay? (Note that this equals the revenue that the seller receives.) Round your answer to at least three decimal places. Q3.3 1 Point What surplus does the winning bidder receive? Round your answer to at least three decimal places.
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1: To determine which buyer wins the auction, we need to find the highest bid. According to the symmetric equilibrium bidding strategy, each buyer will bid their valuation minus the expected value of the second-highest valuation. For buyer 1: Bid = 0.1542 - Show more…
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