You are one of five risk-neutral bidders participating in an independent private

Question

You are one of five risk-neutral bidders participating in an independent private values auction. Each bidder perceives that all other bidders’ valuations for the item are evenly distributed between $30,000 and $90,000. For each of the following auction types, determine your optimal bidding strategy if you value the item at $51,000.

a. First-price, sealed-bid auction

Bid $46,800.

Dutch auction.

Let the auctioneer continue to lower the price until it reaches $30,000, and then yell "Mine!".

Second-price, sealed-bid auction.

Bid $46,800.

English auction.

Bid $30,000. Bid $90,000. Bid $51,000.

Bid $46,800.

Dutch auction.

Let the auctioneer continue to lower the price until it reaches $90,000, and then yell "Mine!". Let the auctioneer continue to lower the price until it reaches $51,000, and then yell "Mine!". Let the auctioneer continue to lower the price until it reaches $46,800, and then yell "Mine!".

Let the auctioneer continue to lower the price until it reaches $30,000, and then yell "Mine!".

Second-price, sealed-bid auction.

Bid $51,000. Bid $90,000. Bid $30,000.

Bid $46,800.

English auction.

Remain active until the price exceeds $46,800, and then drop out. Remain active until the price exceeds $30,000, and then drop out. Remain active until the price exceeds $90,000, and then drop out. Remain active until the price exceeds $51,000, and then drop out.

Explanation / Answer

bid for $51000

option B is correct

second price option bid is- $46,800

option A is correct

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