Consider symmetric two player sealed bid first price auction

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Consider a symmetric 2 player sealed bid first price auction, where the players’ private values are independent and identically distributed as U[0,1]. Suppose the seller imposes a reserve price of r where 0 ≤ r ≤ 1. This means that if the bids are less than r, no one will be allocated the item. What will be the seller’s expected revenue in this case? What reserve price should be set to maximize this expected revenue? Is it worth setting a reserve price at all?

Reference no: EM131129841

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