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 yell "Mine!". Let the auctioneer continue to lower the price until it reaches $67,600, and then yell "Mine!". Let the auctioneer continue to lower the price until it reaches $50,000, and then yell "Mine!". Let the auctioneer continue to lower the price until it reaches $90,000, and then yell "Mine!". c. Second-price, sealed-bid auction. Bid $67,600. Bid $72,000. Bid $90,000. Bid $50,000. d. English auction. Remain active until the price exceeds $67,600, and then drop out. Remain active until the price exceeds $90,000, and then drop out. Remain active until the price exceeds $72,000, and then drop out. Remain active until the price exceeds $50,000, and then drop out.

Expert Solution

Rahul Sunny answered 1 year ago

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