Asked by Zerick Brown on Sep 24, 2024
Verified
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
Vickery Auction
An auction model wherein bidders submit sealed bids, the highest bidder wins but pays the price offered by the second-highest bid, promoting truthful bidding.
Optimal Strategy
The best possible plan of action to achieve a specific goal or to maximize efficiency or effectiveness in a given situation.
Bid Aggressively
In a bidding scenario, to offer a significantly higher amount than other bidders, often to quickly secure an item or contract.
- Compare and contrast the strategic methodologies applied in first-price auctions versus second-price auctions.
Verified Answer
HM
Husnainmirza563 Mirza5632 days ago
Final Answer :
C
Explanation :
In a Vickrey auction, the optimal strategy for each bidder is to bid exactly their own valuation of the item. This is because the highest bidder wins but pays the second highest bid, so bidding your true value maximizes your utility without risking overpayment.
Learning Objectives
- Compare and contrast the strategic methodologies applied in first-price auctions versus second-price auctions.