Question 1

​The winners curse is worse when

Accepted Answer

A) ​There are fewer bidders 
B) Your rivals do not have as much information as you do 
C) Your rivals have more information than you do 
D) ​All of the above 
A) ​There are fewer bidders 
B) Your rivals do not have as much information as you do 
C) Your rivals have more information than you do 
D) ​All of the above

Question 2

​The more bidders there are at a second-price auction,

Accepted Answer

A) ​the higher the expected selling price 
B) the higher each bidder bids 
C) the more each bidder will shade his bid 
D) ​the less each bidder will shade his bid 
A) ​the higher the expected selling price 
B) the higher each bidder bids 
C) the more each bidder will shade his bid 
D) ​the less each bidder will shade his bid

Question 3

​This factor contributes to the winner's curse

Accepted Answer

A) ​your estimate of the value of the object was the most optimistic 
B) your bid was not the highest 
C) there were not many other bidders you had to beat out 
D) ​you shaded your bid too much 
A) ​your estimate of the value of the object was the most optimistic 
B) your bid was not the highest 
C) there were not many other bidders you had to beat out 
D) ​you shaded your bid too much

Question 4

​With which choice are you more likely to avoid Bid-rigging cartels?

Accepted Answer

A) ​Winning bids are not identified 
B) Winning bidders are not identified 
C) Cheaters do not fear punishment from other cartel members 
D) ​All of the above 
A) ​Winning bids are not identified 
B) Winning bidders are not identified 
C) Cheaters do not fear punishment from other cartel members 
D) ​All of the above

Question 5

Anna's Antiques expects to get three bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If three bidders show up at the auction and all of them are high-value bidders,what would the winning bid be?

Accepted Answer

A) ​Just above $100 
B) $100 
C) Just above $70 
D) ​$70 
A) ​Just above $100 
B) $100 
C) Just above $70 
D) ​$70

Question 6

​In a common-value auction

Accepted Answer

A) ​Every bidder knows the exact value of the item being auctioned 
B) Each bidder only has an estimate of the value of the item 
C) The value is different for each bidder 
D) ​All of the above 
A) ​Every bidder knows the exact value of the item being auctioned 
B) Each bidder only has an estimate of the value of the item 
C) The value is different for each bidder 
D) ​All of the above

Question 7

​Bid-rigging is more likely when

Accepted Answer

A) ​auctions are for larger amounts 
B) auctions are frequent 
C) auctions are infrequent 
D) ​the auctioneer is paid on commission rather than a fixed fee 
A) ​auctions are for larger amounts 
B) auctions are frequent 
C) auctions are infrequent 
D) ​the auctioneer is paid on commission rather than a fixed fee

Question 8

​Katy is holding an English auction.If she estimates the values of her bidders to be $2,$4,$10,$15 and $25,she should expect to be able to make ____ off the auction

Accepted Answer

A) ​Just above $10 
B) Just below $10 
C) Just above $15 
D) ​Just below $15 
A) ​Just above $10 
B) Just below $10 
C) Just above $15 
D) ​Just below $15

Question 9

​To attract more aggressive bidding in a common-value auction,as an auctioneer,you should

Accepted Answer

A) ​Release no information about the item 
B) Do not let the bidders examine the item closely 
C) Do not release any adverse information about the item 
D) ​Release maximum information about the item,even if it is adverse 
A) ​Release no information about the item 
B) Do not let the bidders examine the item closely 
C) Do not release any adverse information about the item 
D) ​Release maximum information about the item,even if it is adverse

Question 10

​If the bidders at an oral auction have true values of $8,$7,$6,and $5,the item will sell for

Accepted Answer

A) ​$8 
B) $7 
C) just over $7 
D) ​just under $7 
A) ​$8 
B) $7 
C) just over $7 
D) ​just under $7

Question 11

Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If Anna receives $100 from the auction she can infer that

Accepted Answer

A) ​Both the bidders were high value bidders 
B) Both the bidders were low value bidders 
C) One of the bidders was high value,while the other was low value 
D) ​All of the above 
A) ​Both the bidders were high value bidders 
B) Both the bidders were low value bidders 
C) One of the bidders was high value,while the other was low value 
D) ​All of the above

Question 12

​If the bidders at an oral auction have true values of $78,$72,$66,and $65,the item will sell for

Accepted Answer

A) ​$78 
B) just under $78 
C) $72 
D) ​just over $72 
A) ​$78 
B) just under $78 
C) $72 
D) ​just over $72

Question 13

​Economists love auctions because

Accepted Answer

A) ​They maximize consumer surplus 
B) They minimize producer surplus 
C) They set the price for the item,avoiding costly negotiations 
D) ​They open the door to costly negotiations,with room for manipulation 
A) ​They maximize consumer surplus 
B) They minimize producer surplus 
C) They set the price for the item,avoiding costly negotiations 
D) ​They open the door to costly negotiations,with room for manipulation

Question 14

Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.What is the expected revenue from setting the price at $100?

Accepted Answer

A) ​$70 
B) $75 
C) $80 
D) ​$100 
A) ​$70 
B) $75 
C) $80 
D) ​$100

Question 15

​To avoid the winner's curse

Accepted Answer

A) ​Bid less aggressively as the number of bidders decreases 
B) Bid more aggressively as the number of bidders increase 
C) Bid less aggressively as the number of bidders increases 
D) ​None of the above 
A) ​Bid less aggressively as the number of bidders decreases 
B) Bid more aggressively as the number of bidders increase 
C) Bid less aggressively as the number of bidders increases 
D) ​None of the above

Question 16

​With which choice are you more likely to avoid Bid-rigging cartels?

Accepted Answer

A) ​Holding oral auctions 
B) Holding Vickery auctions 
C) Holding sealed-bid auctions 
D) ​Both B&C 
A) ​Holding oral auctions 
B) Holding Vickery auctions 
C) Holding sealed-bid auctions 
D) ​Both B&C

Question 17

​If the bidders at a first-price auction have true values of $78,$72,$66,and $65,the item will sell for

Accepted Answer

A) ​Just above $78 
B) just over $72 
C) $78 
D) ​$72 
A) ​Just above $78 
B) just over $72 
C) $78 
D) ​$72

Question 18

Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If Anna receives $70 from the auction,she can infer that

Accepted Answer

A) ​Both the bidders were high value bidders 
B) Both the bidders were low value bidders 
C) One of the bidders was high value,while the other was low value 
D) ​All of the above 
A) ​Both the bidders were high value bidders 
B) Both the bidders were low value bidders 
C) One of the bidders was high value,while the other was low value 
D) ​All of the above

Question 19

​A second-price auction

Accepted Answer

A) ​is also called a Vickrey auction 
B) is conducted by bidders submitting a single sealed bid 
C) is where the highest bidder wins and pays the amount of the next highest bid 
D) ​all of the above 
A) ​is also called a Vickrey auction 
B) is conducted by bidders submitting a single sealed bid 
C) is where the highest bidder wins and pays the amount of the next highest bid 
D) ​all of the above

Question 20

​An oral auction

Accepted Answer

A) ​is also called a Vickrey auction 
B) is where bidders submit increasing bids until all but one remains 
C) is where the highest bidder wins and pays the amount of the next highest bid 
D) ​all of the above 
A) ​is also called a Vickrey auction 
B) is where bidders submit increasing bids until all but one remains 
C) is where the highest bidder wins and pays the amount of the next highest bid 
D) ​all of the above

Exam 16: Auctions

​The winners curse is worse when

​The more bidders there are at a second-price auction,

​This factor contributes to the winner's curse

​With which choice are you more likely to avoid Bid-rigging cartels?

Anna's Antiques expects to get three bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If three bidders show up at the auction and all of them are high-value bidders,what would the winning bid be?

​In a common-value auction

​Bid-rigging is more likely when

​Katy is holding an English auction.If she estimates the values of her bidders to be $2,$4,$10,$15 and $25,she should expect to be able to make ____ off the auction

​To attract more aggressive bidding in a common-value auction,as an auctioneer,you should

​If the bidders at an oral auction have true values of $8,$7,$6,and $5,the item will sell for

Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If Anna receives $100 from the auction she can infer that

​If the bidders at an oral auction have true values of $78,$72,$66,and $65,the item will sell for

​Economists love auctions because

Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.What is the expected revenue from setting the price at $100?

​To avoid the winner's curse

​With which choice are you more likely to avoid Bid-rigging cartels?

​If the bidders at a first-price auction have true values of $78,$72,$66,and $65,the item will sell for

Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If Anna receives $70 from the auction,she can infer that

​A second-price auction

​An oral auction

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

The winners curse is worse when

The more bidders there are at a second-price auction,

This factor contributes to the winner's curse

With which choice are you more likely to avoid Bid-rigging cartels?

In a common-value auction

Bid-rigging is more likely when

Katy is holding an English auction.If she estimates the values of her bidders to be $2,$4,$10,$15 and $25,she should expect to be able to make ____ off the auction

To attract more aggressive bidding in a common-value auction,as an auctioneer,you should

If the bidders at an oral auction have true values of $8,$7,$6,and $5,the item will sell for

If the bidders at an oral auction have true values of $78,$72,$66,and $65,the item will sell for

Economists love auctions because

To avoid the winner's curse

With which choice are you more likely to avoid Bid-rigging cartels?

If the bidders at a first-price auction have true values of $78,$72,$66,and $65,the item will sell for

A second-price auction

An oral auction