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 $20,000 and $50,000. For each of the following auction types, determine your optimal bidding strategy if you value the item at $35,000.
a. First-price, sealed-bid auction.
multiple choice 1
Bid $50,000
Bid $20,000
Bid $35,000
Bid $32,000
b. Dutch auction.
multiple choice 2
Let the auctioneer continue to lower the price until it reaches $32,000, and then yell "Mine!".
Let the auctioneer continue to lower the price until it reaches $20,000, and then yell "Mine!".
Let the auctioneer continue to lower the price until it reaches $50,000, and then yell "Mine!".
Let the auctioneer continue to lower the price until it reaches $35,000, and then yell "Mine!".
c. Second-price, sealed-bid auction.
multiple choice 3
Bid $50,000
Bid $20,000
Bid $35,000
Bid $32,000
d. English auction.
multiple choice 4
Remain active until the price exceeds $20,000, and then drop out.
Remain active until the price exceeds $32,000, and then drop out.
Remain active until the price exceeds $35,000, and then drop out.
Remain active until the price exceeds $50,000, and then drop out.