Auctions a
First we will study the four conditions learned this cycle .
1. (IC−H): θHxH −tH ≥ θ HxL−tL
In this condition we see that on the left side of the inequality, the x h (high quality item) payoff
when it’s at a higher price (left side) will be greater than when a low quality product is received
at a lower price( right side).
2. (IC−L):θ LxL−tL ≥θ LxH−tH
In this condition we learn that when having a low type like on the left side of the equation, the x L
( low quality item) payoff at a lower price (t L ) will be greater than when a high quality product
