The conversation between human and AI assistant.
What is the optimal reserve price for a sealed second-price auction with n bidders and no maximum bid?
Can you break that down for me? How does that formula work?
Sure! The basic idea is that in a second-price auction, the highest bidder wins but pays the price of the second-highest bid. So, the optimal reserve price should be set at a point where the highest bidder is willing to bid more than any other bidder, but not so much that they end up paying more than necessary.