Question

Consider 45 risk-neutral bidders who are participating in a second-price, sealed-bid auction. It is commonly known that bidders have independent private values. Based on this information, we know the optimal bidding strategy for each bidder is to:

A. bid their own valuation of the item.

**B.** shade their bid to just below their own
valuation.

C. bid according to the following bid function: *b*
*=* *v* *−* *(v* *−*
*L)/n*.

D. bid one penny above their own valuation to ensure they get the item.

Answer #1

You are a bidder in an independent private values auction. Each
bidder perceives that valuations are evenly distributed between
$100 and $1,000. If there is a total of three bidders and your own
valuation of the item is $900, describe your strategy (how you
would behave) and your optimal bidding in:
a. A first-price, sealed-bid auction.
b. A Dutch auction.
c. A second-price, sealed-bid auction.
d. An English auction.
Explain and/or show your work.

You are a bidder in an independent private values auction, and
you value the object at $5,500. Each bidder perceives that
valuations are uniformly distributed between $1,000 and $9,000.
Determine your optimal bidding strategy in a first-price,
sealed-bid auction when the total number of bidders (including you)
is:
a. 2 bidders.
Bid: $______
b. 10 bidders.
Bid: $______
c. 100 bidders.
Bid: $______

You are a bidder in an independent private values auction, and
you value the object at $4,000. Each bidder perceives that
valuations are uniformly distributed between $1,000 and $7,000.
Determine your optimal bidding strategy in a first-price,
sealed-bid auction when the total number of bidders (including you)
is:
a. 2 bidders.
Bid: $ _______
b. 10 bidders.
Bid: $ _______
c. 100 bidders.
Bid: $_______

4. You are a bidder in an independent private values auction,
and you value the object at $3,500. Each bidder perceives that
valuations are uniformly distributed between $500 and $7,000.
Determine your optimal bidding strategy in a first-price,
sealed-bid auction when the total number of bidders (including you)
is:
a. 2 bidders.
Bid: $
b. 10 bidders.
Bid: $
c. 100 bidders.
Bid: $

Consider an auction where n identical objects are offered, and
there are {n + 1) bidders. The actual value of an object is the
same for all bidders and equal for all objects, but each bidder
gets only an independent estimate, subject to error, of this common
value. The bidders submit sealed bids. The top n bidders get one
object each, and each pays the next highest bid. What
considerations will affect your bidding strategy? How?

Consider an auction where n identical objects are offered and
there are n+ 1 bidders. The true value of each object is the same
for all bidders and for all objects but each bidder gets only an
independent unbiased estimate of this common value. Bidders submit
sealed bids and the top n bidders get one object each and each pays
her own bid. Suppose you lose. What conclusion might you draw from
losing? How will this affect your bidding strategy?...

Consider a 1st-Price Sealed-Bid auction: all players submit
sealed bids, and the object is awarded to the highest bidder who
pays his/her bid. Is bidding one’s true willingnessto-pay still a
dominant strategy?

Consider a first-price sealed-bid auction as the one analyzed in
class. Suppose bidders' valuations are v1=10 and v2=10. Suppose
bidder 2 submits a bid b2=10. Then, in a Nash equilibrium in pure
strategies bidder 1 must be submitting a bid equal to __ . In this
Nash equilibrium, bidder 1's payoff is equal to __ (please, enter
numerical values only, for example: 4).

Consider a first-price sealed-bid auction. Suppose bidders'
valuations are v1=10 and v2=10. Suppose bidder 2 submits a bid
b2=10. Then, in a Nash equilibrium in pure strategies bidder 1 must
be submitting a bid equal to ______. In this Nash equilibrium,
bidder 1's payoff is equal to ______.
Please explain!!

I am holding a sealed-bid, second-price auction for a coupon
worth one month of free coffee at Uncommon Grounds. You spend $50
on coffee each month, so your private value of this coupon is
exactly $50. However, you learn that the other students in COSC 018
are planning to collude in the auction and bid only 10% of their
true values in an attempt to lower the cost of coffee on campus.
With this information, what should your bidding strategy...

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