Ch 18, Auctions Exam Questions With 100% Correct Answers 2024

Ch 18, Auctions Exam Questions With 100% Correct Answers 2024 Oral Auction / English Auction - answerBidders submit increasing bids until 1 bidder remains. Item goes to last remaining bidder what is the expected revenue of the auction? - answerweighted average of x outcomes (where the weights are the probabilities of each) how to calculate weighted average of expected revenue? - answer(winning bid x probability ) + (winning bid x probability) Another name for Vickey Auction? - answerSecond Price Auction what is a Vickrey Auction? - answersealed bid, bidders submit without knowing the bids of other participants. Item awareded to highest bidder, but winner pays second highest bid. why second price auctions? - answerinduces bidders to bid more aggressively b/c their bid determines ONLY if they win, not the price they pay optimal strategy for second price auction? - answerbid exactly your value First Priced Auction - answerhighest bidder wins at price equal to highest bid. Must pay the amount you bid. Bid rotation scheme - answer"rotisserie bidding" you wait your TURN to win when is collusion more likely to occur? - answerin small, frequent auctions in what type of auctions is collusion more likely to occur? - answermore likely in ORAL as opposed to sealed bids common value auctions - answervalue is the same for each bidder (think oil field) but no one knows what it is. You only have an estimate What auction is winning bad news? - answercommon value - means your estimate was highest and most optimistic and actual value how to avoid winners curse? - answerbid as if everyone else thinks the value is less than your estimate. Bid LESS agressively as # bidders increase why do oral auctions return higher prices? - answerb/c they release more information You are bidding in a second-price auction for a painting that you value at $800. You estimate that other bidders are most likely to value the painting at between $200 and $600. Which of these is likely to be your best bid? - answerb. $800 [correct; in a second-price auction, the optimal strategy is to bid exactly your value.] Which of the following is true about different ways of conducting a private-value auction? a. A first-price auction is strategical