Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 17, Problem 4P
To determine
Bidding
(a) A lower value like
(b) A higher value like
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Students have asked these similar questions
Suppose that Alpha Inc, Richardson Industries, and K-Tek are the only three firms interested in a plot of land on the outskirts of town. The lot is being auctioned by a second-price
sealed-bid auction. Alpha values the lot at $16,500, Richardson at $18,000, and K-Tek at $12,500. Each bidding firm's consumer surplus is
CS=-P
if it wins the auction and 0 if it loses. The values are private. What is each bidder's optimal bid? Who wins the auction, and what price does that firm pay?
Alpha's optimal bid is $. Richardson's optimal bid is 5, and K-Tek's is
(Enter your responses as whole numbers)
Consider the following situation: five individuals are participating in an auction for an old bicycle used by a famous cyclist. The table below provides the bidders' valuations of the cycle. The auctioneer starts the bid at an offer price far above the bidders' values and lowers the price in increments until one of the bidders accepts the offer.
Bidder
Value ($)
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?
Suppose that Alpha Inc., Richardson Industries, and K-Tek are the only three firms interested in a plot of land on the
outskirts of town. The lot is being auctioned by a second-price sealed-bid auction. Alpha values the lot at $17,000,
Richardson at $20,000, and K-Tek at $10,000. Each bidding firm's consumer surplus is
CS=v₁ - P
if it wins the auction and 0 if it loses. The values are private. What is each bidder's optimal bid? Who wins the auction,
and what price does that firm pay?
Richardson's optimal bid is $ and K-Tek's is $
Alpha's optimal bid is $
whole numbers.)
(Enter your responses as
Chapter 17 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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