Question

2. Second Price Auction& Google Search Auction (18 points) A. (11 points) There are two bidders, bidder 1 and bidder 2, bidding for one object. Their valuations of the object (vi, v2) are simultaneously submit their bidding prices (b, by The one with the higher price wins the auction and pays the loser's price, the second highest price. (In answering the questions below, no detailed explanations are needed and you just need to directly give the conclusion.) independent. Each one knows his own valuation but not the other's, and they Al) (3 points) Whenever bidder 2's price is higher than bidder 1's valuation, i.e., b>vi. should bidder 1 try to lose or win? And what price bi should bidder 1 bid? tY points) Whenever bidder 2's price is lower than bidder 1's valuation, i.e., b<vi, should bidder 1 y to lose or win? And what price bi should bidder 1 bid? A3) (3 points) Whenever bidder 2's price is equal to bidder 1's valuation, i.e., b2=vi, should bidder 1 try to lose or win? And what price bi should bidder 1 bid? A4) (2 point) In summary what should be bidder 1's dominant bidding price strategy in this auction? B. (7 points) Google is selling three sponsored advertising spots on its search page to four biddee through its AdWords auction system. The bidders' prices and quality scores are listed below. Bidding Price 2 3 Quality Score 20 Bidder 1 Bidder 2 Bidder 3 idder 4 nd the final results for this auction. That is, who wins and who loses? If winning, which spot and how much does it pay? 18 2 17 4 15

Answer 1

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