Consider a Laboratory Experiment in Which Subjects Are Given the Chance

Multiple Choice

Consider a laboratory experiment in which subjects are given the chance to bid on a $20 bill. The initial bid must be at least 50 cents, and each succeeding bid must exceed the previous bid by 50 cents. The rules of the auction specify that when the bidding ceases, the $20 bill will be given to the top bidder, and both the highest bidder and the second highest bidder must pay their final bid. In experimental settings such as this, researchers have found that:

A) the sum of the top two bids is typically less than $20.
B) no one wants to participate in the auction.
C) the sum of the top two bids typically exceeds $20
D) the top bid is exactly $20