In an all-pay auction the highest bidder wins the object and all bidders pay their bid. Suppose two bidders have the same commonly known valuation v = 1 for an object and can simultane- ously and independently submit any bid b € [0, ∞). In order to be admitted to the auction a bidder has to pay an entry fee e, where 0

Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.8: Probability
Problem 31E
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4. In an all-pay auction the highest bidder wins the object and all bidders pay their bid. Suppose
two bidders have the same commonly known valuation v =
ously and independently submit any bid b E [0, 0). In order to be admitted to the auction a
bidder has to pay an entry fee e, where 0 <e< 1. Neither bidder observes whether the other
bidder entered the auction. Find a Nash equilibrium.
1 for an object and can simultane-
Transcribed Image Text:4. In an all-pay auction the highest bidder wins the object and all bidders pay their bid. Suppose two bidders have the same commonly known valuation v = ously and independently submit any bid b E [0, 0). In order to be admitted to the auction a bidder has to pay an entry fee e, where 0 <e< 1. Neither bidder observes whether the other bidder entered the auction. Find a Nash equilibrium. 1 for an object and can simultane-
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