Answer to Question #63176 in Microeconomics for Abdu

Question #63176
Consider the N- bidder auction model. Each bidder's valuation, Vi, is uniformly distributed on [0, 1], and independent of the other bidders' valuations, for i = 1,....,N. i. In the rst price auction, let us focus on strategies of the form Bi(v) = B(v) = kv for each i, where k is a positive constant. Show that in a Nash equilibrium where each player bids according to B(.), k = ((n-1)/n). ii. Show that in the second price auction, it is weakly dominant for each bidder to bid his true valuation, that is, Bi(v) = v.
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