‍Which of the following is true about different ways of conducting a private-value auction? ‍A first-price auction is strategically equivalent to a second-price auction ‍A first-price auction is strategically equivalent to an oral English auction ‍A second-price auction, known as a Vickery auction, is strategically equivalent to an oral English auction ‍None of the above

‍Which of the following is true about different ways of conducting a private-value auction? ‍A first-price auction is strategically equivalent to a second-price auction ‍A first-price auction is strategically equivalent to an oral English auction ‍A second-price auction, known as a Vickery auction, is strategically equivalent to an oral English auction ‍None of the above

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 2MC

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Explain the differce between oral auctions and second-price auctions
See attachments for question context. Question: Some people advocated the following modifiction of the auction rule. A bidder cannot bid for only one object, i.e., if at some point in time he withdraws from the bidding race for one object, he automatically withdraws the race for the other object. Every other aspect of the auction, including how prices increase over time, does not change. What should a bidder do if his valuation for the two objects are 50 and 60, respectively? Explain. Does the auction lead to an efficient allocation? Explain.
None
In a first-price auction, bidding one’s valuation weakly dominates bidding any higher real number
Why do sellers generally prefer a Vickrey auction to a regular sealed bid if sellers don’t receive the highest bid in the Vickrey auction? Sellers only have to sell their item if the bid is the highest-price bid. The second-highest bid in a Vickrey auction is generally higher than the highest bid in a regular sealed-bid auction. The second-highest bid is about the same in both auctions. Sellers prefer the final price is not revealed to all bidders. Sellers would never prefer Vickrey auctions.
At an oral auction for a lamp, half of all bidders have a value of $50 and half have a value of $70. What is the expected winning bid if there are four bidders?
The Government of Malaca has decided to sell pollution permits that will allow people to discharge pollutants into its largest freshwater lake. Each permit represents the right to discharge one tonne of pollutants. Malaca has determined that the lake will tolerate a maximum of 10 tonnes of pollutants per year and has decided to sell the permits using a Dutch auction. This means that the auction starts at a very high price, which is reduced in steps until the price reaches a level that will result in all 10 tonnes of pollution permits being sold at the same price. The results of the bidding are shown in table below. Price per Pollution Bidder Bidder Bidder Bidder Bidder Permit A. B D $5, 500 1 5,000 4,500 4,000 1. 1. 1 2 2. 3 2 1 2 3,500 3,000 2,500 2,000 4 3 2 4 4 4 3 4 4 1,500 7 a. What will be the price of pollution permits as a result of this auction? Price: $ b. Suppose that Bidder E happened to be an environmental protection group. If this group had not participated in the…
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Discrete All-Pay Auction: In Section 6.1.4 we introduced a version of an all- pay auction that worked as follows: Each bidder submits a bid. The highest bidder gets the good, but all bidders pay their bids. Consider an auction in which player 1 values the item at 3 while player 2 values the item at 5. Each player can bid either 0, 1, or 2. If player i bids more than player j then i wins the good and both pay. If both players bid the same amount then a coin is tossed to determine who gets the good, but again both pay. a. Write down the game in matrix form. Which strategies survive IESDS? b. Find the Nash equilibria for this game.
Consider a first-price sealed bid auction of a single object with two bidders j = 1,2 and no reservation price. Bidder 1′s valuation is v1 = 2, and bidder 2′s valuation is Consider the following auction. Two buyers (i = 1,2) have valuations uni- formly distributed over [0,1]. The good is assigned to the highest bid, but the winner pays the average of his bid and the losing bid. Use the revenue equivalence principle to derive the optimal strategies in a symmetric equilibrium. Assume that the optimal bid is a linear function of the buyer’s valuation: b(vi) = cvi where c is a real number.In the event of a tie, the object is awarded by a flip of a fair coin
Economics Consider a first-price sealed-bid auction of a single object with two bidders j = 1, 2. Bidder 1's valuation is v1 = 2, and bidder 2' s valuation is v2 = 5. Both v1 and v2 are known to both bidders. Bids must be in whole dollar amounts (e.g. $1). In the event of a tie, the object is awarded by a flip of a fair coin. (a) Write down this auction as a 2 × 2 matrix game. Hint: note that each bidder can choose a bid from {0, 1, 2, 3, 4, 5, ..}. Your matrix will be incomplete since you cannot write a matrix with infinite rows and columns (b) Eliminate the strictly dominated strategies. Write down the resulting matrix game. (c) An auction is efficient if the good is allocated to the bidder with the highest valuation of the good. What are the Nash equilibria of this game? Åre the Nash equilibria efficient? %3D
Consider a second-price auction (i.e. the highest bid wins, but the winner only pays the second-highest bid), where one bidder is willing to pay much more for the object than anyone else. These are the individual valuations (each bidder only knows their own) Bidder 1 Bidder 2 Bidder 3 Bidder 4 Bidder 5 Bidder 6 Bidder 7 What is the difference between the amount Bidder 2 bids and the amount Bidder 2 pays in equilibrium? 50 O $1,315 $5,600 $3,045 $2,015,400 $5,600 $5,900 $1,500 $3,110 $1,315 O $2,015,400