You are considering auctioning a Leonardo Da Vinci original sketch. You entice four bidders to come to your auction. The bidders' valuations of the sketch in decreasing order are $3.0, $2.2, $2.0, and $1.5 (in millions).
If you used a second-price sealed bid auction, who would win and what would the winning price be?
If you used a first-price sealed bid auction and the optimal strategy for the participants was to shade their bid by 20% and the participants used this strategy, who would win and what would the winning price be?
Which auction should you choose to maximize your profit?
Answer the above questions if the valuations of the sketch are $3.0, $2.7, $2.0 and $1.5.