Consider 45 risk-neutral bidders who are participating in a second-price, sealed-bid auction. It is commonly known...

Consider 45 risk-neutral bidders who are participating in a second-price, sealed-bid auction. It is commonly known that bidders have independent private values. Based on this information, we know the optimal bidding strategy for each bidder is to:

A. bid their own valuation of the item.

B. shade their bid to just below their own valuation.

C. bid according to the following bid function: b = v − (v − L)/n.

D. bid one penny above their own valuation to ensure they get the item.

Expert Solution

Hence optimal bidding strategy for each player is to bid truthfully for a single unit second price sealed bid auction.

Correct Ans - A

Rahul Sunny answered 1 year ago

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