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Homework answers / question archive / Texas A&M International University ECO 3320 CHAPTER 18 1)An oral auction is also called an English auction is where bidders submit increasing bids until all but one remains is where the sole remaining bidder wins and pays his winning bid all of the above A second-price auction is also called a Vickrey auction is conducted by bidders submitting a single sealed bid is where the highest bidder wins and pays the amount of the next highest bid all of the above An oral auction is also called a Vickrey auction is where bidders submit increasing bids until all but one remains is where the highest bidder wins and pays the amount of the next highest bid all of the above A second-price auction is also called an English auction is where the highest bidder wins and pays the amount of the next highest bid is where the sole remaining bidder wins and pays his winning bid all of the above An oral auction is also called a Vickrey auction is conducted by bidders submitting a single sealed bid is where the sole remaining bidder wins and pays his winning bid all of the above A second-price auction is also called a Vickrey auction is where bidders submit increasing bids until all but one remains is where the sole remaining bidder wins and pays his winning bid all of the above The optimal bidding strategy for an oral auction is To shade your bid below your true value and drop out well before it is reached To shade your bid below your true value and drop out just when the shaded amount is reached To bid drop out when the bidding exceeds your true value To size up your competition to determine how much to shade your bid The optimal bidding strategy for a second-price auction is To bid your true value To shade your bid well below your true value To shade your bid just a little below your true value To size up your competition to determine how much to shade your bid If the bidders at an oral auction have true values of $8, $7, $6, and $5, the item will sell for $8 $7 just over $7 just under $7 If the bidders at a second-price auction have true values of $8, $7, $6, and $5, the item will sell for $8 $7 just over $7 just under $7 If the bidders at an oral auction have true values of $78, $72, $66, and $65, the item will sell for a) $78 b) just under $78 c) $72 d) just over $72 If the bidders at a second-price auction have true values of $78, $72, $66, and $65, the item will sell for a) $78 b) just under $78 c) $72 d) just over $72 The more bidders there are at an oral auction, the higher the expected selling price the higher each bidder bids the longer that each bidder will continue to bid the less each bidder will shade his bid The more bidders there are at a second-price auction, the higher the expected selling price the higher each bidder bids the more each bidder will shade his bid the less each bidder will shade his bid More bidders increase the selling price at an oral auction because bidders bid more aggressively the true value of the winner is higher the true values of the losers is higher bidders shade their bids by less More bidders increase the selling price in a second-price auction because the true values of the losers is higher the true value of the winner is higher bidders bid more aggressively bidders shade their bids by less Ebay's use of "bidding agents" will effectively turn an English auction into a Vickery auction effectively turn a Vickery auction into an English auction decide how much to shade your bid for you make you a more aggressive bidder First-price auctions have all the following properties EXCEPT Highest bid wins Highest bidder pays her winning bid The good is assigned to the second-highest bidder The price is set to the highest bid First-price auctions have all the following properties EXCEPT Highest bid wins Highest bidder pays the second highest bid The good is assigned to the highest bidder The price is set to the highest bid If the bidders at a first-price auction have true values of $78, $72, $66, and $65, the item will sell for a) $78 b) just under $78 c) $72 d) just over $72 If the bidders at a first-price auction have true values of $8, $7, $6, and $5, the item will sell for $8 $7 just over $7 just under $7 Bid-rigging has all of these features EXCEPT It is a collusive agreement The bid-riggers pay a smaller amount than without bid-rigging Bid-riggers need an auxiliary mechanism to allocate the good within the bid-riggers Bid rigging is usually a legitimate and legal strategy for the buyer-side The following is not associated with bid-rigging bid-riggers bidding their true value "knockout" auctions bid rotations amnesty to the first conspirator willing to testify against fellow conspirators Bid-rigging is more likely when auctions are larger auctions are infrequent auctions generate the same set of potential bidders the auctioneer is paid on commission rather than a fixed fee Bid-rigging is more likely when auctions are larger auctions are frequent auctions generate different sets of potential bidders the auctioneer is paid on commission rather than a fixed fee Bid-rigging is less likely in oral auctions second-price auctions first-price sealed-bid auctions all are equally likely Bid-rigging is more likely when auctions are larger auctions are infrequent auctions generate different sets of potential bidders the auctioneer is paid a fixed fee rather than on commission In common value auctions Bidder do not know the value of the object being sold Each bidder makes the same estimate of the value of the good All bidders know the estimates of the others The true value of the item differs across bidders In common value auctions Every bidder know the value of the object being sold Each bidder makes their own estimate of the value of the good All bidders know the estimates of the others The true value of the item differs across bidders In common value auctions Every bidder know the value of the object being sold Each bidder makes the same estimate of the value of the good Bidders do not know the estimates of the others The true value of the item differs across bidders In common value auctions Every bidder know the value of the object being sold Each bidder makes the same estimate of the value of the good All bidders know the estimates of the others The true value of the item is common across bidders The winners curse is more often associated with; oral auctions second-price auctions first-price sealed bid auctions common value auctions This factor contributes to the winner's curse your estimate of the value of the object was the most optimistic your bid was not the highest there were not many other bidders you had to beat out you did not shade your bid enough This factor contributes to the winner's curse your estimate of the value of the object was not the most optimistic your bid was the highest there were not many other bidders you had to beat out you did not shade your bid enough This factor contributes to the winner's curse your estimate of the value of the object was not the most optimistic your bid was not the highest there were many other bidders that you beat out you did not shade your bid enough This factor contributes to the winner's curse your estimate of the value of the object was not the most optimistic your bid was not the highest there were not many other bidders you had to beat out you shaded your bid a lot To attract more bidders, and more aggressive bidders, to your auction reveal all of the relevant information about the value of the object don't allow bidders to know how others are bidding do not allow potential bidders to examine the object too closely do not hold oral auctions To attract more bidders, and more aggressive bidders, to your auction withhold relevant information about the value of the object allow bidders to know how others are bidding do not allow potential bidders to examine the object too closely do not hold oral auctions To attract more bidders, and more aggressive bidders, to your auction withhold relevant information about the value of the object don't allow bidders to know how others are bidding allow potential bidders ample time to examine the object being sold do not hold oral auctions To attract more bidders, and more aggressive bidders, to your auction withhold relevant information about the value of the object don't allow bidders to know how others are bidding do not allow potential bidders to examine the object too closely hold oral auctions
Texas A&M International University
ECO 3320
CHAPTER 18
1)An oral auction
a) $78
b) just under $78
c) $72
d) just over $72
a) $78
b) just under $78
c) $72
d) just over $72
a) $78
b) just under $78
c) $72
d) just over $72
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