Exam 15: Auctions

Bidder Bid per share Shares A \ 70 200,000 B \ 50 50,000 C \ 45 50,000 D \ 40 100,000 E \ 35 50,000 F \ 30 100,000 G \ 20 100,000 TABLE 15.2 -Consider the information provided in Table 15.2. Suppose that seller retains the right to stop the bidding at any price. If the objective of the auction is to maximize sales revenues, the offering price is:

Suppose that Hans and Frans are bidding for an 1878CC Morgan silver dollar. Hans knows that Frans is willing to pay $1,150. Frans knows that Hans is willing to pay $975. Suppose that the seller's reservation price is $800 and bids are in $100 increments. The winner of this sealed-bid, second-price auction will pay:

Correlated values estimates in an auctions setting means that:

A reservation price:

In a sealed-bid, second-price auction:

Bidder Bid per share Shares A \ 70 200,000 B \ 50 50,000 C \ 45 50,000 D \ 40 100,000 E \ 35 50,000 F \ 30 100,000 G \ 20 100,000 TABLE 15.2 -Consider the information provided in Table 15.2. Suppose that seller retains the right to stop the bidding at any price. The objective of the auction is to maximize sales revenues. At the selected bid price, the sellers revenues are:

In an English auction:

Bidder Bid per share Shares A \ 50 5,000 B \ 45 10,000 C \ 40 40,000 D \ 40 25,000 E \ 35 10,000 F \ 30 15,000 G \ 20 35,000 TABLE 15.3 -Suppose that Magnum Opus Corporation announces that it intends to go public by offering 100,000 shares using a multiple-item Dutch auction. Table 15.3 summarizes the offer price and number of shares of each bidder. If the seller disposes of the entire offering, the auction will raise:

Three individuals are bidding for a house. The individuals' private values are V₁ = $298,000, V₂ = $310,000 and V₃ = $322,000. It is generally believed that the lowest and highest possible values of the house are $250,000 and $350,000, respectively. Individual 3's optimal strategy is to submit a bid of:

In an independent private value auction:

An auction involving multiple bidders selling something of value to a single buyer is called:

Moe, Larry, Curly, and Shemp are bidding Groucho Marx' rubber duck. Their individualprivate values of the rubber duck are V_M = $50,000, V_L = $60,000, V_C = $70,000 and V_S = $80,000. It is generally believed that the lowest and highest possible values of the house are $40,000 and $100,000, respectively. Moe's optimal strategy is to submit a bid of:

In common value auctions, differences in private valuations stem from:

Suppose that Hans and Frans are bidding for an 1878CC Morgan silver dollar. Hans knows that Frans is willing to pay $1,150. Frans knows that Hans is willing to pay $975. Suppose that the seller's reservation price is $800 and bids are in $100 increments. Frans' dominant strategy in a sealed-bid, second-price auction is to submit a bid of:

An auction involving multiple bidders buying something of value from a single seller is called:

Bidder Bid per share Shares A \ 100 100,000 B \ 90 200,000 C \ 75 300,000 D \ 50 200,000 E \ 40 300,000 F \ 30 100,000 G \ 25 50,000 TABLE 15.1 -Consider the information provided in Table 15.1, which represents bids in a multiple-item Dutch auction in which the seller wishes to dispose 1 million shares. The lowest bid per share that will dispose of the entire offering is:

Bidder Bid per share Shares A \ 50 5,000 B \ 45 10,000 C \ 40 40,000 D \ 40 25,000 E \ 35 10,000 F \ 30 15,000 G \ 20 35,000 TABLE 15.3 -Suppose that Magnum Opus Corporation announces that it intends to go public by offering 100,000 shares using a multiple-item Dutch auction. Table 15.3 summarizes the offer price and number of shares of each bidder. The lowest bid per share that will dispose of the entire offering is:

In a sealed-bid, first-price auction with perfect information, the winner of the auction is:

Bidder Bid per share Shares A \ 100 100,000 B \ 90 200,000 C \ 75 300,000 D \ 50 200,000 E \ 40 300,000 F \ 30 100,000 G \ 25 50,000 TABLE 15.1 -Consider the information provided in Table 15.1. Suppose that seller retains the right to stop the bidding at any price. If the objective of the auction is to maximize sales revenues, the offering price is:

In a sealed-bid, second-price auction with independent private values, risk-averse bidders should: