c. Now suppose that this is an English auction, the style that most of us think ofwhen we think of an auction. The auctioneer calls out a price until somebodyaccepts the price he calls, at which point he raises the price by a very smallamount. He then asks for acceptance of the new price, and when that is accepted,he raises the price again. This continues until no one is willing to accept a newprice, at which point the painting is sold to the bidder who accepted the mostrecent accepted price, which will be the price actually paid by that bidder.Suppose the other bidder has accepted the most recent price the auctioneer calledout, and the auctioneer has now called out a slightly higher price. What is Jiao'sbest response?d. True or False: The seller of the painting SHOULD expect to receive the fullvaluation of the bidder who has the highest valuation under either of these auctionformats. Explain why you answered the way you did.e. In light of your answers in this section, what do you think are the benefits ofchoosing an auction to sell products? How is an auction like price discrimination?What kinds of products would be good to sell via auction? 2.Jiao is bidding at an art auction against one other bidder. She values the paintingup for bid at $16 million. No one else at the auction knows her valuation, and she doesnot know anyone else's valuation. She and the other bidder know that individualvaluations for the painting among all art lovers range from $10 million to $20 million,and each value in this range is equally likely to be Jiao's true valuation or her opponent'strue valuation. This means that if a bidder has a valuation of V somewhere between $10million and $20 million, the probability that the other bidder has a higher valuation is(S20 million – V)/$10 million.If Jiao wins the painting at a price of p, her utility will be 16 million – p. If she does notwin the painting, her utility will be 0.a. Suppose this is a first-price sealed bid auction. This means each bidder submitsone bid in writing, without knowing their opponent's bid, and the bidder whosubmits the highest bid wins the item and pays the highest bid. What is Jiao'sexpected utility if she bids $16 million? What is her expected utility if she bids$12 million?b. True or False: Being truthful (that is, bidding your exact valuation) is a dominantstrategy in this auction format. Explain why you answered the way you did.

First-price sealed bid auction - Such type of auction is also known as blind auction as all the…

when we think of an auction. The auctioneer calls out a price until somebody accepts the price he calls, at which point he raises the price by a very small amount. He then asks for acceptance of the new price, and when that is accepted, he raises the price again. This continues until no one is willing to accept a new price, at which point the painting is sold to the bidder who accepted the most recent accepted price, which will be the price actually paid by that bidder. Suppose the other bidder has accepted the most recent price the auctioneer called out, and the auctioneer has now called out a slightly higher price. What is Jiao's best response? d. True or False: The seller of the painting SHOULD expect to receive the full valuation of the bidder who has the highest valuation under either of these auction formats. Explain why you answered the way you did. e. In light of your answers in this section, what do you think are the benefits of choosing an auction to sell products? How is an auction like price discrimination?

when we think of an auction. The auctioneer calls out a price until somebody accepts the price he calls, at which point he raises the price by a very small amount. He then asks for acceptance of the new price, and when that is accepted, he raises the price again. This continues until no one is willing to accept a new price, at which point the painting is sold to the bidder who accepted the most recent accepted price, which will be the price actually paid by that bidder. Suppose the other bidder has accepted the most recent price the auctioneer called out, and the auctioneer has now called out a slightly higher price. What is Jiao's best response? d. True or False: The seller of the painting SHOULD expect to receive the full valuation of the bidder who has the highest valuation under either of these auction formats. Explain why you answered the way you did. e. In light of your answers in this section, what do you think are the benefits of choosing an auction to sell products? How is an auction like price discrimination?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter5: Probability: An Introduction To Modeling Uncertainty

Section: Chapter Questions

Problem 27P: Suppose we are interested in bidding on a piece of land and we know one other bidder is interested.1...

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Suppose we are interested in bidding on a piece of land and we know one other bidder is interested.1 The seller announced that the highest bid in excess of 10,000 will be accepted. Assume that the competitors bid x is a random variable that is uniformly distributed between 10,000 and 15,000. a. Suppose you bid 12,000. What is the probability that your bid will be accepted? b. Suppose you bid 14,000. What is the probability that your bid will be accepted? c. What amount should you bid to maximize the probability that you get the property? d. Suppose you know someone who is willing to pay you 16,000 for the property. Would you consider bidding less than the amount in part (c)? Why or why not?
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Spouses Robert and Yollie wanted to sell their house. They found a prospective buyer, Nina. Yollie negotiated with Nina for the sale of the property. They agreed on a fair price of P2 Million. Nina sent Yollie a letter confirming her intention to buy the property. Later, another couple, Marius and Ellen, offered a similar house at a lower price of P1.5 Million. But Nina insisted on buying the house of Robert and Yollie for sentimental reasons. Nina prepared a deed of sale to be signed by the couple and a manager’s check for P2 Million. After receiving the P2 Million, Robert signed the deed of sale. However, Yollie was not able to sign it because she was saying she changed her mind. Yollie filed suit for nullification of the deed of sale and for moral and exemplary damages against Nina. Does Nina have any cause of action against Robert and Yollie?