Suppose there are two bidders in a sealed-bid, second-price auction. Bidders’ values for the item are private, and are independently and uniformly distributed in [0, 1]. Calculate the seller’s (unconditional) expected revenue if the reserve price is 0.25. Note that a bidder wins the item only when her bid is higher than the reserve price 0.25 and also higher than the other bidder’s bid. The winner pays max{0.25, b^{(2)}}, where b^{(2)} is the second highest bid (the losing bidder’s bid). In addition, calculate a bidder’s expected profit if her value for the item is 0.5.
I got
Expected revenue = 0.375
bidder's expected profit = 0.375
Not sure if the answer is correct or not. Please have a look. Thank you.