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 $40,000 and $90,000. For each of the following auction types, determine your optimal bidding strategy if you value the item at $58,000.
a. First-price, sealed-bid auction.
multiple choice 1
Bid $90,000
Bid $40,000
Bid $58,000
Bid $54,400
b. Dutch auction.
multiple choice 2
Let the auctioneer continue to lower the price until it reaches $40,000, and then yell "Mine!".
Let the auctioneer continue to lower the price until it reaches $58,000, and then yell "Mine!".
Let the auctioneer continue to lower the price until it reaches $54,400, and then yell "Mine!".
Let the auctioneer continue to lower the price until it reaches $90,000, and then yell "Mine!".
c. Second-price, sealed-bid auction.
multiple choice 3
Bid $90,000
Bid $54,400
Bid $58,000
Bid $40,000
d. English auction.
multiple choice 4
Remain active until the price exceeds $90,000, and then drop out.
Remain active until the price exceeds $58,000, and then drop out.
Remain active until the price exceeds $54,400, and then drop out.
Remain active until the price exceeds $40,000, and then drop out.