8. An Example for Bayesian Nash Equilibrium: First Price Auction (Game Theory Playlist 9)

In this episode we describe another famous Bayesian game (First Price Auction) and solve for the Nash equilibrium of this Bayesian game (aka Bayesian Nash equilibrium). This game is the most complicated of all six examples we studied in earlier episodes. Unlike games in episodes 3-5 and 7, first price auction game has infinitely many types. Also, unlike the game in episode 6, first price auction game has infinitely many available strategies for each player/type.
In this episode we don't provide a general method to find a BNE. Rather, we provide a method to verify that a given functional form constitutes a BNE. This method can be applied to any other auction games, but for different auction games the functional form would naturally be different. That means, if you don't know what the correct functional form is, then you cannot use this method. In order to find the correct functional form for different auction games, we need more sophisticated calculations, which is a subject of more advanced game theory courses.
It's crucial to watch lecture videos in the proper order to ensure effective learning. This is because the concepts in each video build upon those introduced in previous videos. To help you with this, I recommend visiting my website, www.selcukozyurt.com, for a recommended course outline.

[@agarwalarti]

thank you for making this so intuitive & simple.

[@marufahmed9430]

Thanks, professor for your lucid explanation of such a complex theory. Eagerly, waiting for your Ph.D. level game theory videos

[@berkonver7621]

Thank you so much for sharing these videos with us, they are extremely helpful! Selçuk hocam ağzınıza sağlık gerçekten açıklayıcı olmuş.

[@vallimay4291]

Life saver. loving the course

[@Daakkoonn]

pretty good explanation, just that a=1/2 so a = 0,5 not 2

[@selcukozyurt]

Oh Yes! a is 1/2, not 2. That sometimes happen, it is just an unnoticed mistake. Thanks for pointing out.

[@francescomikhael4217]

Man you are the best, very well explained

[@pree__winter2237]

Delhi School of Economics 💓

[@Zoelcruz]

Im so happy I found this video!

[@agarwalarti]

At 11:49 it should be a = 1/2

[@berke-ozgen]

Clear Sir!

[@francescasasso3476]

the best!

[@XiangGuo-d3c]

Vert clear! but I have a question about why a is not 1/2?

[@bijaykarakheti9321]

a=1/2. I think he just made a typo.

[@marcuss_lane1072]

Sir shouldn't be a = 1/2 ?

[@nannaadam4988]

Really great way of explaining. However I would like a clarification, you mention in the last few minutes of the video the value for a is 2, should it not be 1/2 instead given that we get b(v)= v_i/2 ?

[@Mabbdaa]

That's also what I was thinking!