What is optimal submitted bid for buyer with private value v

Assignment Help Microeconomics
Reference no: EM13879977

In a second-bid auction, buyers submit sealed bids, and the highest bidder obtains the item for sale but pays the seller an amount equal to the second highest bid.

a. Suppose buyers hold different private values for the item. Show that each player's dominant strategy is to bid his or her true value in this sealed bid auction. (Hint: Check that the bidder cannot gain by either understating or overstating his or her reservation price in making his or her bid.)

b. In the setting of independent, private values, the English and second- bid auctions lead to identical bids and outcomes. Explain why.

c. The major auction houses allow buyers who will not be in attendance to submit bids prior to the public auction. A representative of the house bids on the buyer's behalf up to but not in excess of the submitted bid. A submitted bid of $1,200 could well win the item for a price of $900 when the bidding stops in the actual English auction. What is the optimal submitted bid for a buyer with private value vi? Explain.

Reference no: EM13879977

Questions Cloud

Create a scenario of a potential emergency situation : create a scenario of a potential emergency situation
Analysis on the business problems the organizations faced : write a case analysis on the business problems the organizations faced, the management's solution to the problems, and your own analysis on the case.
Describe the process ceemco should undertake to determine : Describe the process Ceemco should undertake to determine which accounting software might be the best fit for the company  Although you do not know much about the company, develop a list of requirements you believe any accounting software should hav..
Kaplan cpa review course to study accounting changes : The following questions are adapted from a variety of sources including questions developed by the AICPA Board of Examiners and those used in the Kaplan CPA Review Course to study accounting changes and errors while preparing for the CPA examination.
What is optimal submitted bid for buyer with private value v : Suppose buyers hold different private values for the item. Show that each player's dominant strategy is to bid his or her true value in this sealed bid auction.
What other risk portfolio and assessments for the community : What other risk portfolio and assessments for the community exist
Prepare a proposal on tesco company : Can you please provide me proposal - If the proposal accepted by university then u will do the work for me as well.
Exchange with the absorber plates : During operation the surface temperatures are known to be T1 = 25°C, T2 = 60°C, and T3 = 70°C. What is the net rate at which radiation is transferred to the cover due to exchange with the absorber plates?
How can the identified issues derail the execution : How can the identified issues derail the execution of even the most well-planned emergency response?

Reviews

Write a Review

Microeconomics Questions & Answers

  What is difference between prices and average variable cost

These multiple choice problems belong to Economics. The first problem is about demand curve in competitive market and the second problem is about comparing the difference between prices and average variable cost.

  Assume that losing the hat does not alter how you value it

Suppose that you value a hat from your favorite university at $20. The university bookstore has the hat on sale for $15. You purchase the hat but lose it on the way home. What should you do? Assume that losing the hat does not alter how you value it.

  Can you say whether or not actual inflation

Can you say whether or not actual inflation is equal to expected inflation - Can you say whether or not inflation will rise or fall from its current amount

  What is the inflation rate for year x

The price of the basket in the current year is $92, what is the CPI - what is the inflation rate for Year "x"

  Explains aggregate savings behavior as a function

[Econometrics] Suppose you are attempting to build a model that explains aggregate savings behavior as a function of the level of interest rates. Would you rather sample during a period of fluctuating interest rates or a period in which interest rate..

  Discuss the implications on the dead weight loss

Discuss the implications on the dead weight loss

  Draw a graph of the labor market showing the effect

Suppose that workers become concerned about the future and therefore wish to increase their hours of work relative to leisure. At the same time, there is an increase in the capital stock, making workers more productive.

  Consider the graph belownbsp it contains 2 separate demand

consider the graph below.nbsp it contains 2 separate demand curves d1 and d2 the marginal revenue curve associated with

  What are the basic objectives of monetary policy

What are the basic objectives of monetary policy?

  What is the firm''s total wage bill

A firm is competitive in both product and resource market. The firm's short run production function is given by Q = 0.5L1/2 where L is the labor input. Assume the wage rate is $10 and the firm's fixed cost is 100. If the price of the good in the m..

  How much does aggregate expenditure increase

Normal 0 false false false EN-US X-NONE X-NONE If income increases by $10,..

  What is the economic profit that all firms earn

In what condition will a perfectly competitive firm that incurs economic losses choose to produce rather than shut down in the short run? Why will the firm do so (c) Should a firm produce at an output level at which long-run average cost is minimiz..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd