In Nash equilibrium, the price received by a seller in a ﬁrst-price sealed bid auction with private values would be equal to _____.

Question

Quizplus · Accepted Answer

In a first-price sealed bid auction with private values, the Nash equilibrium price received by a seller is equal to the expected value of the second-highest willingness to pay. This is because each bidder bids slightly above the value they believe is the second-highest bid to win the auction, without paying their maximum willingness to pay.

In Nash Equilibrium, the Price Received by a Seller in a ﬁRst-Price