Question

In: Economics

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

Solutions

Expert Solution


Related Solutions

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 45 risk-neutral bidders who are participating in a second-price, sealed-bid auction. It is commonly known...
Consider 45 risk-neutral bidders who are participating in a second-price, sealed-bid auction. It is commonly known that bidders have independent private values. Based on this information, we know the optimal bidding strategy for each bidder is to: A. bid their own valuation of the item. B. shade their bid to just below their own valuation. C. bid according to the following bid function: b = v − (v − L)/n. D. bid one penny above their own valuation to ensure...
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...
Question 3 Jo and Jim are bidding in a second-price, independent, private value auction. Their values...
Question 3 Jo and Jim are bidding in a second-price, independent, private value auction. Their values for the object are independently and uniformly distributed on the interval (1,2). (1) What is the expected value of the winning bidder? (2) What is the expected value of the price?
Auction Auction Price Age of Item Number Bidders 1 $946 113 9 2 $1,336 126 10...
Auction Auction Price Age of Item Number Bidders 1 $946 113 9 2 $1,336 126 10 3 $744 115 7 4 $1,979 182 11 5 $1,522 150 9 6 $1,235 127 13 7 $1,483 159 9 8 $1,152 117 13 9 $1,545 175 8 10 $1,262 168 7 11 $845 127 7 12 $1,055 108 14 13 $1,253 132 10 14 $1,297 137 9 15 $1,147 137 8 16 $1,080 115 12 17 $1,550 182 8 18 $1,047 156 6...
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.
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?
Consider a second-price sealed-bid auction. Suppose bidders' valuations are v1=10 and v2=10. Select all that apply....
Consider a second-price sealed-bid auction. Suppose bidders' valuations are v1=10 and v2=10. Select all that apply. (PLEASE EXPLAIN CHOICES COMPLETEY) a. One bidder submitting a bid equal to 10 and the other submitting a bid equal to 0 is a Nash equilibrium. b. Bidding a value b1 equal to her own valuation v1 is a weakly dominated strategy for bidder 1. c. Both bidders submitting bids equal to 0 is a Nash equilibrium. d. Both bidders submitting bids equal to...
Define the concept of Risk Premium and what its value would imply regarding risk aversion, risk lover, and risk neutral decision-makers.
Define the concept of Risk Premium and what its value would imply regarding risk aversion, risk lover, and risk neutral decision-makers.
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...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT