Exam 17: Auctions and Bargaining

Scenario: Neil and Claire are playing a game. Neil has been given five cookies and has been asked to decide how many he would like to give Claire. Claire has to decide whether to accept Neil's offer or reject it. -Refer to the scenario above.This is an example of a(n)________.

Rick and Kate want to go on a date.Rick wants to go to a rock concert,while Kate wants to watch a movie.Rick values going to the concert at $100,while Kate values watching a movie at $50.What is the equilibrium in this situation?

In a Dutch auction,the starting bid is ________.

Which of the following is true of a second-price auction?

According to the ________,as long as property rights are clearly defined,two agents can always bargain to reach the efficient outcome.

Overbidding in a second-price auction is likely to result in a ________.

The optimal bidding strategy in a second-price auction is similar to that of a(n)________ auction,because dominant strategies are at work in both of them.

Isabella is participating in a first-price auction for a house.If there are five other bidders and her maximum willingness to pay for the house is $60,000,what is her optimal bidding strategy?

In a first-price auction,the ________ bidder wins the good being auctioned.

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.If Molly wins the auction by using her optimal bidding strategy,she will earn a surplus of ________.

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,Tom will no longer bid when bidding reaches ________.

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.John should submit a bid of ________.

A ________ person is indifferent to a bet that has zero expected value.

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.The seller will earn a revenue of ________.

Buyers and sellers in a flea market often determine the terms of exchange through a process of ________.

A(n)________ is an auction in which bids are placed publicly and the price decreases until a bidder stops the auction.

Scenario: An ancient painting is being auctioned off in an English auction. The following table shows the maximum willingness to pay of each bidder. -Refer to the scenario above.The winner of this auction will earn a consumer surplus of ________.

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 Rebecca wins the auction,she will earn a surplus of ________.

In a first-price auction,________.

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.What is the optimal strategy of each bidder?