a. Find an estimate of p1, the true proportion of experienced bidders who fell prey to the winner's super- curse. b. Find an estimate of p2, the true proportion of less- experienced bidders who fell prey to the winner's curse. c. Construct a 90% confidence interval for p1 – p2.
a. Find an estimate of p1, the true proportion of experienced bidders who fell prey to the winner's super- curse. b. Find an estimate of p2, the true proportion of less- experienced bidders who fell prey to the winner's curse. c. Construct a 90% confidence interval for p1 – p2.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
Related questions
Question
A and B
Transcribed Image Text:The "winner's curse" in auction bidding. In auction bid-
ding, the "winner's curse" is the phenomenon of the win-
ning (or highest) bid price being above the expected value
of the item being auctioned. The Review of Economics and
Statistics (Aug. 2001) published a study on whether bid
experience impacts the likelihood of the winner's curse oc-
curring. Two groups of bidders in a sealed-bid auction were
compared: (1) super-experienced bidders and (2) less-
experienced bidders. In the super-experienced group, 29
of 189 winning bids were above the item's expected value;
in the less-experienced group, 32 of 149 winning bids were
above the item's expected value.
Transcribed Image Text:a. Find an estimate of p1, the true proportion of super-
experienced bidders who fell prey to the winner's
curse.
b. Find an estimate of p2, the true proportion of less-
experienced bidders who fell prey to the winner's
curse.
c. Construct a 90% confidence interval for p1 – P2.
d. Give a practical interpretation of the confidence interval,
part c. Make a statement about whether bid experience
impacts the likelihood of the winner's curse occurring.
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