Question 15.66

34. There are other auction formats besides the second- price, or Vickrey, auction considered in Example 9. In a first-price auction, the highest bidder gets the item and pays his or her bid for the item. Explain why it would not be an equilibrium for Anneliese, Binh, and Charlie to bid their true valuations of $300, $200, and $100, respectively, for the stamp if a first-price auction were used in Example 9. (In a first-price auction, every player submits a bid at the same time and the person who bids the highest gets the item for his or her bid.)