You hold an auction among three bidders. You estimate that each bidder has a value of...

You hold an auction among three bidders. You estimate that each bidder has a value of either $16 or $20 for the item, and you attach probabilities to each value of 50%. What is the expected price? If two of the three bidders collude, what is the price?

Expert Solution

Rahul Sunny answered 2 years ago

You are one of five risk-neutral bidders participating in an independent private values auction. Each bidder...

You are one of five risk-neutral bidders participating in an independent private values auction. Each bidder perceives that all other bidders’ valuations for the item are evenly distributed between $50,000 and $90,000. For each of the following auction types, determine your optimal bidding strategy if you value the item at $72,000. a. First-price, sealed-bid auction. Bid $72,000. Bid $67,600. Bid $50,000. Bid $90,000. b. Dutch auction. Let the auctioneer continue to lower the price until it reaches $72,000, and then...

Consider a private value auction with 2 bidders. The auction is carried out as a second...

Consider a private value auction with 2 bidders. The auction is carried out as a second price sealed bid auction where in case of a tie between the bidders, the winner is selected by a coin toss. The seller has valuation of the good of zero and will accept any bid at or greater than zero. Each bidder knows his/her own valuation, v, and does not know the valuation of the other bidder. It is common knowledge that the bidder...

Assume that there are 10 risk-neutral bidders participating in an independent private value auction. The bidders...

Assume that there are 10 risk-neutral bidders participating in an independent private value auction. The bidders assume that item’s value is normally distributed between $10,000 and $30,000. Determine the optimal bidding strategy for each of the following options if you value the item at $20000. 3.1 First-price, sealed-bid auction 3.2 Dutch auction 3.3 Second-price, sealed-bid auction 3.4 English auction

Releasing more information in a common-value auction is: 1) good for the bidders because it reduces...

Releasing more information in a common-value auction is: 1) good for the bidders because it reduces the risk that they face 2) good for the auctioneer because it attracts more bidders 3) good for the bidders because they are less likely to bid more on the item than it’s worth 4) both 1 and 2 Please, clarify your answer.

1. Queen Elizabeth has decided to auction off the crown jewels. There are two bidders: the...

1. Queen Elizabeth has decided to auction off the crown jewels. There are two bidders: the Sultan and the Sheikh. Each will simultaneously submit a bid in a sealed envelope; the highest bidder will win, and pay what he bid. (This is a “First Price Auction”.) The Sultan is only allowed to bid an odd number: 1, 3, 5, 7, or 9. The Sheikh is only allowed to bid an even number: 2, 4, 6, 8, or 10. The Sultan...

In a Treasury auction of $800 million par value T-bills, the following bids were received: bidder...

In a Treasury auction of $800 million par value T-bills, the following bids were received: bidder bid amount price 1 $ 300 m 0.9820 competitive 2 $ 200 m 0.9850 competitive 3 $ 350 m 0.9825 competitive 4 $ 250 m 0.9835 competitive 5 $150 m 0.9845 competitive 6 $ 220 m Non-competitive Who will receive T-bills in this auction, in what quantity, and at what price?

Question 6. There are two bidders in a sealed-bid, second-price auction. The object for sale has...

Question 6. There are two bidders in a sealed-bid, second-price auction. The object for sale has a common value. Each bidder, i = 1,2, receives a signal i that is independently and uniformly distributed on the interval [0, 1]. The true value of the object, v, is the average of the two signals, v = (σ1 + σ2) / 2 (a) If bidder 1 gets the signal σ = 0.7, how much does he think the object is worth? (b)...

Consider a 2-person private value, first-price auction. The object is worth $10,000 to bidder 1 who...

Consider a 2-person private value, first-price auction. The object is worth $10,000 to bidder 1 who knows that bidder 2’s value is uniformly distributed between 0 and $40,000. Assume that bidder 2 is going to use his equilibrium bidding strategy. a) What is bidder 1’s optimal bid for his value $10,000 and what is his expected payoff? b) Assume that bidder 1 learns that the object is worth $22,000 to bidder 2 and in turn, bidder 2 is not aware...

Each business has value to its stakeholders. This value, however, is not determined uniformly among its...

Each business has value to its stakeholders. This value, however, is not determined uniformly among its stakeholders. Research a business that was recently acquired or merged with another through the purchase of its stock or the buyout of its shareholders. Address the following: Determine the value proposition that it represented for its shareholders before its acquisition. You may determine its value before acquisition and its latest 10K through yahoofinance.com. Determine the buyout value upon acquisition. According to Brooks (2017), each...

The owner of a private firm has requested that you estimate the value of the firm...

The owner of a private firm has requested that you estimate the value of the firm so that it can be marketed for sale. The firm creates custom, made-to-order furniture. The firm’s most recent results are shown in Appendix A. Furniture Company Income & FCF Analysis ($ in thousands ) Most Recent Year Revenue $ 20,000 Cost of Goods Sold 15,500 Gross Profit Margin 4,500 Gross Profit Margin % 22.5% General Operating Expenses 2,000 Depreciation & Amortization 500 Total Operating...

Question