Deck 16: Auctions

Question 1

​Economists love auctions because

A)​They maximize consumer surplus
B)They create efficiency by allotting the item to the highest-value bidder
C)They create efficiency by allotting the item to the lowest value bidder
D)​All of the above

Answer 1

B

Question 2

​An English auction is

A)​A sealed auction
B)An oral auction
C)An auction where bidders submit decreasing bids
D)​All of the above

Answer 2

B

Question 3

The more bidders there are at an oral auction,​

A)​the higher the expected selling price
B)the higher each bidder bids
C)the longer that each bidder will continue to bid
D)​the less each bidder will shade his bid

Answer 3

A

Question 4

​Auctions are valuable for selling items such as

A)​Art
B)Antiques
C)Custom jewelry
D)​All of the above

Question 5

​In oral auctions,the price that the winner pays depends on

A)​The winner's willingness to pay
B)The highest willingness to pay among the losers
C)The lowest willingness to pay among the losers
D)​None of the above

Question 6

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

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

Question 7

​An oral auction

A)​is also called an English 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 8

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 instead holds an oral auction between the two bidders and one bidder of each type shows up,she earn ___ from the auction.

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

Question 9

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 can only set one price,what price should she set?

A)​$100
B)$70
C)Any price higher than $100
D)​Any price lower than $70

Question 10

​The optimal bidding strategy for an oral auction is

A)​To shade your bid below your true value and drop out well before it is reached
B)To shade your bid below your true value and drop out just when the shaded amount is reached
C)To drop out when the bidding exceeds your true value
D)​To size up your competition to determine how much to shade your bid

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.What is the expected revenue from setting the price at $70?

A)​$60
B)$70
C)$80
D)​$100

Question 12

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

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

Question 13

​Economists love auctions because

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?

A)​$70
B)$75
C)$80
D)​$100

Question 15

​More bidders would tend to increase the selling price at an oral auction if

A)​bidders bid less aggressively
B)the true value of the winner is higher
C)the true values of the losers is higher
D)​Both A&C

Question 16

​An oral auction

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 17

​An oral auction

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 18

​Auctions are valuable for selling items such as

A)​Pens
B)Artwork
C)Standard automobiles
D)​All of the above

Question 19

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 combinations of customers can Anna expect?

A)​High value,high value
B)High value,low value
C)Low value,low value
D)​All of the above

Question 20

​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

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

Question 21

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 two of the bidders are high-value,what would the winning price be?

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

Question 22

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?

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

Question 23

​A second-price auction

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 24

​_______losing bidders lead to _____winning bids

A)​Stronger;raise
B)Weaker;reduce
C)Stronger;raise
D)​None of the above

Question 25

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 two of the bidders are low value,what would the winning price be?

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

Question 26

​A second-price auction

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 27

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

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 28

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)​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 29

In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid have been without the cartel?​

A)​$741
B)$701
C)$661
D)​$631

Question 30

In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid be in this auction?

A)​$741
B)$701
C)$651
D)​$631

Question 31

​In a sealed-bid first price auction,if you notice that your competition is weaker,you should

A)​Shade your bid more
B)Shade your bid less
C)Bid more aggressively
D)​Both B&C

Question 32

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 holds an auction between the two customers,the expected value of this auction is

A)​$70
B)$78
C)$85
D)​$100

Question 33

​A second-price auction

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 34

In an auction where the bidders values are $400,$500,$650,$800 and $850,the highest two bidders form a bid-rigging cartel.What would have the winning bid been if there was no cartel?

A)​$501
B)$651
C)$801
D)​$846

Question 35

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 $71 from the auction,she can infer that

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 36

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 low-value bidders,what would the winning bid be?

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

Question 37

​In a sealed-bid first price auction,if you notice that your competition is stronger,you should

A)​Shade your bid more
B)Shade your bid less
C)Bid more aggressively
D)​Both B&C

Question 38

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 holds an auction between the two bidders,and both have high values,she would earn ___ from the auction.

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

Question 39

In an auction where the bidders values are $400,$500,$650,$800 and $850,the highest two bidders form a bid-rigging cartel.What would be the winning bid in this auction?

A)​$501
B)$651
C)$801
D)​$846

Question 40

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 holds an auction between the two bidders,and both the bidders have low values,she would earn ___ from the auction.

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

Question 41

​In Vickery auctions,the item is awarded to the highest bidder at a price set by

A)​Highest bid
B)Second highest bid
C)Third highest bid
D)​Cost

Question 42

​Vickery auctions are

A)​Oral auctions
B)Second price sealed bid auctions
C)English auctions
D)​None of the above

Question 43

The following is not associated with bid-rigging​

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 44

​Bid-rigging has all of these features EXCEPT

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 45

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

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 46

​Bid-rigging is more likely when

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 47

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

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

Question 48

​Bid-rigging is less likely in

A)​oral auctions
B)English auctions
C)first-price sealed-bid auctions
D)​all are equally likely

Question 49

​First-price auctions have all the following properties EXCEPT

A)​Highest bid wins
B)Highest bidder pays the second highest bid
C)The item is won by the highest bidder
D)​The price is set to the highest bid

Question 50

​A Vickery auction is

A)​Strategically equivalent to an English auction
B)Does not need to have bidders show up at the same time or place
C)All of the above
D)​None of the above

Question 51

Ebay's use of "bidding agents" will​

A)​effectively turn an English auction into a Vickery auction
B)effectively turn a Vickery auction into an English auction
C)decide how much to shade your bid for you
D)​make you a more aggressive bidder

Question 52

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

A)​bidders bid less aggressively
B)the true value of the losers is lower
C)the true values of the losers is higher
D)​Both A&C

Question 53

​Bid-rigging is more likely when

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

Question 54

​First-price auctions have all the following properties EXCEPT

A)​Highest bid wins
B)Highest bidder pays her winning bid
C)The item is won by the second-highest bidder
D)​The price is set to the highest bid

Question 55

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

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

Question 56

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

A)​Just above $78
B)Just under $72
C)Just above $72
D)​Just above $66

Question 57

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

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

Question 58

​The optimal strategy in a Vickery auction is to

A)​Bid aggressively
B)Bid above your value since you would be paying the second highest price
C)Bid exactly your value
D)​Bid below your value

Question 59

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

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

Question 60

​The optimal bidding strategy for a second-price auction is

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 61

In common value auctions​

A)​Every bidder 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 is unknown to bidders

Question 62

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

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 63

​This factor contributes to the winner's curse

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 did not shade your bid enough

Question 64

The winners curse is more often associated with;​

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

Question 65

​This factor contributes to the winner's curse

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

Question 66

​Bid-rigging is more likely when

A)​auctions are for larger amounts
B)auctions are infrequent
C)auctions are oral
D)​auctions are sealed-bid

Question 67

​To attract more bidders,and more aggressive bidders,to your common-value auction

A)​withhold relevant information about the value of the object
B)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 68

​In common value auctions

A)​Bidders 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 69

To attract more bidders,and more aggressive bidders,to your common-value auction​

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 70

​In common value auctions

A)​Every bidder know the value of the object being sold
B)Each bidder makes their own 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 71

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

A)​Holding smaller auctions
B)Holding larger auctions
C)Holding frequent auctions
D)​Both B&C

Question 72

​This factor contributes to the winner's curse

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 73

​In common value auctions

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

Question 74

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

A)​The winning bids are announced
B)The winning bids are not announced
C)Winning bids are announced right after the auction
D)​Both A&C

Question 75

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

A)​Holding smaller auctions
B)Holding larger auctions
C)Holding infrequent auctions
D)​Both B&C

Question 76

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

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

Question 77

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

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

Question 78

​A bid rotation scheme in a cartel is where

A)​The cartel members do not participate in auctions
B)The cartel members never bid against each other
C)The cartel members take turns winning the bids and do not bid against the member whose turn it is to win
D)​All of the above

Question 79

​This factor contributes to the winner's curse

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 shaded your bid too much

Question 80

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

A)​Holding English auctions
B)Holding sealed-bid auctions
C)Holding oral auctions
D)​All of the above