In a sealed-bid, second-price auction with complete information, the winner is the bidder who submits the second-highest price, but pays the price submitted by the highest bidder. Do you agree? Explain.
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In a sealed-bid, second-
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- Use the expected value information to illustrate how having more bidders in an oral auction will likely result in a higher winning bid.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.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.
- Explain why a player in a sealed-bid, second-price auction would never submit a bid that exceeds his or her true value of the object being sold. (Hint: What if all players submitted bids greater than their valuations of the object?)The primary research finding from studies of the “Ultimatum Game” is that when most people make economic decisions they … (choose one) -optimize. -consider the issue of fairness. -meliorate. -apply the availability heuristic.Why it is unwise to bid less than your valuation of the good in a sealed bid second-price auction. In the first price sealed bid auction, a player gets a positive payoff by doing bid shading. Explain the tradeoff between biding lower than the value of the object and biding very close to value of the object.
- Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …Some collector has a painting that he no longer values. However, there are two buyers that would be happy to acquire it. Buyer 1 assigns a value of $900 to the painting, and buyer 2 of $1,000. Explain that this situation can be represented as a cooperative game with transferable utility. Obtain the set of players and write down the characteristic function (supposing that the grand coalition’s value is $1000). Find the Core and the Shapley value of the game.How to solve this question? Consider an antique auction where bidders have independent private values. There are two bidders, each of whom perceives that valuations are uniformly distributed between $100 and $1,000. One of the bidders is Sue, who knows her own valuation is $200. What is Sue's optimal bidding strategy in a Dutch auction?
- Economic agents for example consumers or firms often do things Economic agents (for example, consumers or firms) often do things that at first glance seem to be inconsistent with their self-interest. People tip at restaurants and when they are on vacation even if they have no intention to return to the same place. Firms, sometimes, install costly pollution abatement equipment voluntarily. How can these deviations from Nash predictions be explained? Economic agents for example consumers or firms often do thingsConsider the charity auction. In many charity auctions, altruistic celebrities auction objects with special value for their fans to raise funds for charity. Madonna, for example, held an auction to sell clothing worn during her career and raised about 3.2 million dollars. In the charity auction the winner of the lot is the highest bidder. The difference with the standard auction is that all bidders are required to pay an amount equal to what they bid. Suppose there are two bidders and assume bidders have valuations randomly drawn from the interval [2, 4] according to the uniform distribution. 1. Derive the equilibrium bidding function. Hint: After getting the differential equation given by the FOC, propose a non-linear bidding function b(v) = α + βv2 as solution. Your task is to find α and β. 2. Derive the revenue of the seller in the charity auction. 3. Would the seller obtain higher profits if she organized a first-price sealed bid auction instead? A. Yes, higher revenue B. No, lower…Two parties, Juan and Ben, have been negotiating the purchase by Ben of Juan's car. Juan receives a new and higher bid for his car from Adriana. How might Adriana's bid change Juan and Ben's threat values? The threat values are unchanged. Juan now values the car at the price of Adriana's bid, her bid is his opportunity cost of selling the car to Ben, and that opportunity cost is Juan's new threat value. Juan's new threat value is the product of the difference between Ben and Adriana's offers and the probability the car will be sold to Adriana. Juan's threat value is unchanged, but Ben has to consider his new opportunity cost
