Question 1

This factor contributes to the winner's curse

Accepted Answer

A) your estimate of the value of the object was not the most optimistic 
B) your bid was the highest 
C) there were not many other bidders you had to beat out 
D) you did not shade your bid enough 
A) your estimate of the value of the object was not the most optimistic 
B) your bid was the highest 
C) there were not many other bidders you had to beat out 
D) you did not shade your bid enough B

Question 2

Bid-rigging is more likely when

Accepted Answer

A) auctions are larger 
B) auctions are infrequent 
C) auctions generate the same set of potential bidders 
D) the auctioneer is paid on commission rather than a fixed fee 
A) auctions are larger 
B) auctions are infrequent 
C) auctions generate the same set of potential bidders 
D) the auctioneer is paid on commission rather than a fixed fee C

Question 3

More bidders increase the selling price in a second-price auction because

Accepted Answer

A) the true values of the losers is higher 
B) the true value of the winner is higher 
C) bidders bid more aggressively 
D) bidders shade their bids by less 
A) the true values of the losers is higher 
B) the true value of the winner is higher 
C) bidders bid more aggressively 
D) bidders shade their bids by less A

Question 4

This factor contributes to the winner's curse

Accepted Answer

A) your estimate of the value of the object was not 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 a lot 
A) your estimate of the value of the object was not 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 a lot

Question 5

If the bidders at a first-price 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 6

The winners curse is more often associated with;

Accepted Answer

A) oral auctions 
B) second-price auctions 
C) first-price sealed bid auctions 
D) common value auctions 
A) oral auctions 
B) second-price auctions 
C) first-price sealed bid auctions 
D) common value auctions

Question 7

Bid-rigging is more likely when

Accepted Answer

A) auctions are larger 
B) auctions are frequent 
C) auctions generate different sets of potential bidders 
D) the auctioneer is paid on commission rather than a fixed fee 
A) auctions are larger 
B) auctions are frequent 
C) auctions generate different sets of potential bidders 
D) the auctioneer is paid on commission rather than a fixed fee

Question 8

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 9

A second-price auction

Accepted Answer

A) is also called an English auction 
B) is where the highest bidder wins and pays the amount of the next highest bid 
C) is where the sole remaining bidder wins and pays his winning bid 
D) all of the above 
A) is also called an English auction 
B) is where the highest bidder wins and pays the amount of the next highest bid 
C) is where the sole remaining bidder wins and pays his winning bid 
D) all of the above

Question 10

An oral auction

Accepted Answer

A) is also called a Vickrey auction 
B) is conducted by bidders submitting a single sealed bid 
C) is where the sole remaining bidder wins and pays his winning 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 sole remaining bidder wins and pays his winning bid 
D) all of the above

Question 11

Bid-rigging has all of these features EXCEPT

Accepted Answer

A) It is a collusive agreement 
B) The bid-riggers pay a smaller amount than without bid-rigging 
C) Bid-riggers need an auxiliary mechanism to allocate the good within the bid-riggers 
D) Bid rigging is usually a legitimate and legal strategy for the buyer-side 
A) It is a collusive agreement 
B) The bid-riggers pay a smaller amount than without bid-rigging 
C) Bid-riggers need an auxiliary mechanism to allocate the good within the bid-riggers 
D) Bid rigging is usually a legitimate and legal strategy for the buyer-side

Question 12

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 13

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

Question 14

A second-price 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 sole remaining bidder wins and pays his winning 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 sole remaining bidder wins and pays his winning bid 
D) all of the above

Question 15

The following is not associated with bid-rigging

Accepted Answer

A) bid-riggers bidding their true value 
B) "knockout" auctions 
C) bid rotations 
D) amnesty to the first conspirator willing to testify against fellow conspirators 
A) bid-riggers bidding their true value 
B) "knockout" auctions 
C) bid rotations 
D) amnesty to the first conspirator willing to testify against fellow conspirators

Question 16

The optimal bidding strategy for a second-price auction is

Accepted Answer

A) To bid your true value 
B) To shade your bid well below your true value 
C) To shade your bid just a little below your true value 
D) To size up your competition to determine how much to shade your bid 
A) To bid your true value 
B) To shade your bid well below your true value 
C) To shade your bid just a little below your true value 
D) To size up your competition to determine how much to shade your bid

Question 17

In common value auctions

Accepted Answer

A) Bidder do not know the value of the object being sold 
B) Each bidder makes the same estimate of the value of the good 
C) All bidders know the estimates of the others 
D) The true value of the item differs across bidders 
A) Bidder do not know the value of the object being sold 
B) Each bidder makes the same estimate of the value of the good 
C) All bidders know the estimates of the others 
D) The true value of the item differs across bidders

Question 18

To attract more bidders,and more aggressive bidders,to your auction

Accepted Answer

A) reveal all of the relevant information about the value of the object 
B) don't allow bidders to know how others are bidding 
C) do not allow potential bidders to examine the object too closely 
D) do not hold oral auctions 
A) reveal all of the relevant information about the value of the object 
B) don't allow bidders to know how others are bidding 
C) do not allow potential bidders to examine the object too closely 
D) do not hold oral auctions

Question 19

If the bidders at a second-price 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 20

To attract more bidders,and more aggressive bidders,to your auction

Accepted Answer

A) withhold relevant information about the value of the object 
B) don't allow bidders to know how others are bidding 
C) allow potential bidders ample time to examine the object being sold 
D) do not hold oral auctions 
A) withhold relevant information about the value of the object 
B) don't allow bidders to know how others are bidding 
C) allow potential bidders ample time to examine the object being sold 
D) do not hold oral auctions

Exam 18: Auctions

This factor contributes to the winner's curse

Bid-rigging is more likely when

More bidders increase the selling price in a second-price auction because

This factor contributes to the winner's curse

If the bidders at a first-price auction have true values of $8,$7,$6,and $5,the item will sell for

The winners curse is more often associated with;

Bid-rigging is more likely when

A second-price auction

A second-price auction

An oral auction

Bid-rigging has all of these features EXCEPT

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

An oral auction

A second-price auction

The following is not associated with bid-rigging

The optimal bidding strategy for a second-price auction is

In common value auctions

To attract more bidders,and more aggressive bidders,to your auction

If the bidders at a second-price auction have true values of $8,$7,$6,and $5,the item will sell for

To attract more bidders,and more aggressive bidders,to your auction

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

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 Indirect 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

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