Exam 17: Auctions and Bargaining

Scenario: Tom, Pat, Arthur, and Julie are participating in a second-price auction for a good. Tom values the good at $150, Pat values it at $180, Arthur values it at $250, and Julie values it at $200. -Refer to the scenario above.The winner of this auction will earn a surplus of ________ if he or she follows his or her dominant strategy.

Scenario: Tom, Pat, Arthur, and Julie are participating in a second-price auction for a good. Tom values the good at $150, Pat values it at $180, Arthur values it at $250, and Julie values it at $200. -Refer to the scenario above.Julie should place a bid of ________.

Two players are playing a game.Player 1 is given $100 and is asked to offer a certain share of the money to Player 2.Player 2 can then choose to accept or reject the offer.If she accepts the offer,the money will be split between the two players in the ratio as decided by Player 1.If she rejects the offer,neither player will get anything. a)Assume that both players prefer more money to less.How would Player 1 choose her optimal strategy in this case? b)If Player 2 prefers fairness to money,how will her decision change?

Scenario: Four friends-Tom, Bill, Jeff, and Roger-are participating in an English auction. Tom values the good being auctioned at $500, Bill values it at $210, Jeff values it at $350, and Roger values it at $625. -Refer to the scenario above.If they are the only bidders in the auction,Bill will continue to bid as long as bidding is below ________.

In which of the following types of auctions can bidders not see one another's bids?

Scenario: Consider the following situation. Molly is one among the sixty-one bidders who take part in a first-price auction for vintage furniture. Molly places a value of $850, the highest value, for a vintage dressing table that comes up for auction. Joseph has the second-highest willingness to pay of $750. -Refer to the scenario above.Which of the following is an optimal bid for Molly?

Scenario: Alice is participating in a Dutch auction for a painting. There are five other bidders, and Alice values the painting at $30,000. -Refer to the scenario above.If Alice wins the auction,the seller earns an average revenue of ________.

Gary has won a laptop in an online auction.This implies that Gary's willingness to pay for the laptop was ________.

A cruiser bike is being auctioned in a first-price auction.You always wanted to own a cruiser bike and therefore decide to participate in the auction.You value the bike at $4,000.On the day of the auction,you see that there are seventy other bidders.Your optimal bid in this case is ________.

Scenario: Four friends-Tom, Bill, Jeff, and Roger-are participating in an English auction. Tom values the good being auctioned at $500, Bill values it at $210, Jeff values it at $350, and Roger values it at $625. -Refer to the scenario above.If they are the only bidders in the auction and each of them uses his optimal strategy,who will win?

Scenario: Rebecca is participating in a Dutch auction for an antique necklace. The total number of bidders in this auction is ten. Rebecca values the necklace at $45,000, while all the other bidders value it below $45,000. -Refer to the scenario above.If the number of participants in the auction increases to twenty,Rebecca should place a bid of ________.

Kate and her sister share a room.The sister prefers sleeping with all windows closed,while Kate prefers sleeping with at least one window open to let in some fresh air.Since neither of them is willing to give up her own preferences,they end up fighting every night.Is there a possible solution to this problem if Kate values keeping the windows open at night at $100,while the sister values keeping the windows closed at night at $80?

An open-outcry auction is an auction where ________.

Scenario: Alice is participating in a Dutch auction for a painting. There are five other bidders, and Alice values the painting at $30,000. -Refer to the scenario above.What is Alice's optimal bidding price?

Scenario: John, Jacob, Alex, and Maria participate in a first-price auction for an iPod. John values the iPod at $400, Jacob values it at $300, Alex values it at $250, and Maria values it at $200. -Refer to the scenario above.The winner of this auction will earn a surplus of ________ if he or she follows his or her dominant strategy.

Scenario: Alice is participating in a Dutch auction for a painting. There are five other bidders, and Alice values the painting at $30,000. -Refer to the scenario above.Alice will earn an expected surplus of ________ if she uses her optimal strategy to win the game.

Scenario: Alice is participating in a Dutch auction for a painting. There are five other bidders, and Alice values the painting at $30,000. -Refer to the scenario above.Which of the following will be true if Alice stops the auction at $30,000?

Elly needs to get her leaking faucet repaired as soon as possible.She gets in touch with a plumber,who asks for an unreasonably high fee.If no other plumber is available for work,who has a higher bargaining power? Explain your answer.

The optimal bidding strategy in a first-price auction is identical to the optimal bidding strategy in a(n)________ auction.

Scenario: Four friends-Tom, Bill, Jeff, and Roger-are participating in an English auction. Tom values the good being auctioned at $500, Bill values it at $210, Jeff values it at $350, and Roger values it at $625. -Refer to the scenario above.If they are the only bidders in the auction,Jeff will win the auction if ________.