Answer to Question #146774 in Microeconomics for Mathias Loe

Question

Auctions: A house is up for sale. It will be sold via an auction.
Assume there are four bidders, and that all care only about their own
private value of living in the house, they do not plan to ever sell it in
the future. Their valuations are: 3, 5, 8, 12. If the auctioneer uses
an open ascending bid auction (”English auction”), what will be the
Nash equilibrium price? What will be the payoff to the winner?

Answer 1

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