The auction design that would be in the best interest of the seller as to whether it should be single-round bid or multiple round open bidding.

Question

You have three tickets to a Celtics game on a night that you are going to be out of town (so the value of unsold tickets is zero to you). There are only four possible buyers of a Celtics ticket. The table below lists the respective reservation prices of these four possible buyers: Customer Reservation Price 1 $25 2 $35 3 $50 4 $60 a) How much revenue can you generate using the English auction mechanism from the sale of the first ticket? [Bids can be made in increments of $1.00] b) How much revenue can you generate using the English auction mechanism from the sale of the second ticket? [Bids can be made in increments of $1.00] c) How much revenue can you generate using the English auction mechanism from the sale of the third ticket? [Bids can be made in increments of $1.00] d) How much total revenue can you generate using the English…

Answer 1

Question

Chapter 15A, Problem 1.3CE

To determine

To Explain: The auction design that would be in the best interest of the seller as to whether it should be single-round bid or multiple round open bidding.

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You have three tickets to a Celtics game on a night that you are going to be out of town (so the value of unsold tickets is zero to you). There are only four possible buyers of a Celtics ticket. The table below lists the respective reservation prices of these four possible buyers: Customer Reservation Price 1 $25 2 $35 3 $50 4 $60 a) How much revenue can you generate using the English auction mechanism from the sale of the first ticket? [Bids can be made in increments of $1.00] b) How much revenue can you generate using the English auction mechanism from the sale of the second ticket? [Bids can be made in increments of $1.00] c) How much revenue can you generate using the English auction mechanism from the sale of the third ticket? [Bids can be made in increments of $1.00] d) How much total revenue can you generate using the English…

Explain how the strategic choice of reservation price can raise expected profitability yet threaten efficiency in an English auction.

Consider the following situation: five individuals are participating in an auction for an old bicycle used by a famous cyclist. The table below provides the bidders' valuations of the cycle. The auctioneer starts the bid at an offer price far above the bidders' values and lowers the price in increments until one of the bidders accepts the offer. Bidder Value ($) Roberto 750 Claudia 700 Mario 650 Bradley 600 Michelle 550 What is the optimal strategy of each player in this case? Who will win the auction if each bidder places his or her optimal bid? If Claudia wins the auction, how much surplus will she earn?