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 9Q
To determine
Ways in which English auction is similar to Dutch auction.
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Students have asked these similar questions
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?
PJ has been owning a City Golf, model 2004 for the past 15 years and now plans to sell it. Town auctioneers has offered to sell his car at their next auction. This is the first time PJ is hearing at an auction.
PJ has approached you to explain to him what auction means and asked you if he should sell his car on auction or not. Briefly explain to PJ
“While auctions are appealing in theory, the challenges of auction design in practice are insurmountable” discuss
Chapter 17 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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Similar questions
- Explain how the number of bidders in a common value auction affects the outcome of the auction. Relate this to the effect on price in different market structures based on the number of producers.arrow_forwardExplain how the strategic choice of reservation price can raise expected profitability yet threaten efficiency in an English auction.arrow_forwardConsider an English auction with 3 bidders having the valuations v1=12, v2=7, and v3=9. What will be the revenue to the seller?arrow_forward
- Discrete All-Pay Auction: In Section 6.1.4 we introduced a version of an all- pay auction that worked as follows: Each bidder submits a bid. The highest bidder gets the good, but all bidders pay their bids. Consider an auction in which player 1 values the item at 3 while player 2 values the item at 5. Each player can bid either 0, 1, or 2. If player i bids more than player j then i wins the good and both pay. If both players bid the same amount then a coin is tossed to determine who gets the good, but again both pay. a. Write down the game in matrix form. Which strategies survive IESDS? b. Find the Nash equilibria for this game.arrow_forwardExplain how an auction to sell a consumer-facing banking division might be used to determine the value of the division.arrow_forwardWhat is Revenue Equivalence Theorem for the standard auction types?arrow_forward
- This question is from game theoryarrow_forwardYou 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…arrow_forward10 Use the expected value information to illustrate how having more bidders in an oral auction will likely result in a higher winning bid.arrow_forward
- Can you explain the "altruism and reciprocity" game theory, and provide an example? Is this the same as the "trust game?"arrow_forwardHello, please help me to solve this question in Game Theory. Thanks in advance!Consider a first price sealed-bid auction of an object with two bidders. Each bidder i’s valuation of the object is vi, which is known to both bidders. The auction rules are that each player submits a bid in a sealed envelope. The envelopes are then opened, and the bidder who has submitted the highest bid gets the object and pays the auctioneer the amount of his bid. If the bidders submit the same bid, each gets the object with probability 0.5. Bids must be integers. Find a Nash equilibrium for this game and show whether it is unique.arrow_forwardNash Equilibrium (NE) A: Period 1 B: A A: 4 A: 2 B: 1 B: 2 Period 2 Nash Equilibrium (NE) Nash Equilibrium (NE) A: A: B: B: A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 3 B: 6 B: 7 B: 4 B: 5 B: 7 B: 8 B:5 B: 6 d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. е. How has the penalty changed the firm's behavior?arrow_forward
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