Combine the two statements of second price auction

Reference no: EM13205758

Second Price Auction. In a second price auction with two bidders, we know from class that everyone bidding his valuation

(b1 = v2 and b2 = v2) is the dominant strategy equilibrium.

(a) Show that for player 1, bidding b0 1 < v1 is weakly dominated by bidding b1 = v1.

(b) In classes, we showed that any player 10s strategy b0 1 > v1 is weakly dominated by strategy b1 = v1. Combine the above two statements, what conclusion can you draw? Why this conclusion is relevant if we want to show (b1 = v2; b2 = v2) is the dominant strategy equilibrium?

Reference no: EM13205758

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