First-price auction with discrete values Exercise 4.5 in Vijay Krishna's Auction Theory:


  Suppose that bidder 1 always has value $X_1=2$, while bidder 2's value, $X_2$ is equally likely to be $0$ or $2$. Find equilibrium bidding strategies in a first-price auction. (Note that since values are discrete, the equilibrium will be in mixed strategies.)



I don't understand why it is that since values are discrete, the equilibrium will be in mixed strategies. Is there some rule/principle to this?
How do I set up for the problem? Since equilibrium are in mixed strategies, I can suppose that player 1 bids $b_1,\ldots,b_k$ with probabilities $p_1,\ldots,p_k$ respectively. But that seems too general to make any progress.
The suggested pure strategies do not create an equilibrium, because if $X_2=X_1=2$, there is a tie. Whichever tie-breaking rule is employed, one of the players would want to deviate to $\beta_i=1+\epsilon$ to avoid the tie and win with certainty. If tie breaking is always in favor of the second player, player 1 deviates to $0+\epsilon$.

Discrete values in this setting do suggest a mixed strategy equilibrium (non-degenerate), because the probability of a tie in valuations is non-zero. This is why the pure strategy equilibrium from the continuous case is missing here.

The more general case of this problem is in Doni &amp; Menicucci (2013).