Sealed-bid auction with one seller

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Consider a second-price, sealed-bid auction with one seller who has one unit of the object, which he values at s, and two buyers, 1 and 2, who have values of v1 and v2 for the object. The values s, v1, and v2 are all independent, private values. Suppose that both buyers know that the seller will submit his own sealed bid of s, but they do not know the value of s. Is it optimal for the buyers to bid truthfully? That is, should they each bid their true value? Give an explanation for your answer.

Reference no: EM132162697

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