Asked by Daniel Yannick on Sep 24, 2024
Verified
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
First-Price Auction
An auction format in which the highest bidder wins the item and pays the price they bid.
True Values
The actual, inherent worth or validity of something, often contrasted with perceived or estimated values.
Selling Price
The amount of money a buyer pays to acquire a product or service from a seller.
- Discriminate between the bidding strategies of first-price auctions and second-price auctions.
Verified Answer
NM
Netra Miller2 days ago
Final Answer :
A
Explanation :
In a first-price auction, the winner is the bidder with the highest value and they pay the price equal to their bid. In this scenario, the bidder with the highest value is the one with a true value of $8, so they will win the auction and pay $8.
Learning Objectives
- Discriminate between the bidding strategies of first-price auctions and second-price auctions.