Expected revenue of a Vickrey auction
You run a sealed-bid second-price (Vickrey) auction for one item among 4 bidders whose values are i.i.d. Uniform. Since truthful bidding is dominant, the price you collect is the second-highest value. What revenue do you expect (to two decimals)?
Show hints (2)+
- Revenue is the second-highest of 4 uniforms, not the maximum.
- The -th smallest of uniforms has mean ; the 2nd-highest of 4 is the 3rd smallest.
Answer
Reveal answer →Final answer
0.6 (± 0.01)
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