Calculate the optimal reserve price

Reference no: EM133706678

Question: Suppose there are n bidders and their valuations are independently and randomly drawn from a triangular distribution with probability density function (PDF) f(v) = %U, with v € [0, 2]. (a) Consider the case of a sealed bid second price auction. Assume that all the bidders act optimally, hence they bid truthfully by bidding their own valuations. Calculate the optimal reserve price. (b) Suppose now we're running a first price auction (without reserve price). Calculate the optimal bid function of a bidder with valuation v. (c) Use your answer from the previous question and calculate the optimal bid function when the number of bidders goes to infinity.

Reference no: EM133706678

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