Asked by anthony triguero on Jul 20, 2024
Verified
An antique cabinet is being sold by means of an English auction.There are four bidders, Holly, Penelope, Minnie, and Sheila.These bidders are unacquainted with each other and do not collude.Holly values the cabinet at $1,600, Penelope values it at $1,350, Minnie values it at $2,100, and Sheila values it at $1,100.If the bidders bid in their rational self-interest, the cabinet will be sold to
A) Holly for about $1,600.
B) Minnie for about $2,100.
C) either Minnie or Holly for slightly more than $1,600.Which of them actually gets it is randomly determined.
D) Minnie for slightly more than $1,600.
E) None of the above.
English Auction
A common type of auction where participants openly bid against one another, with the price gradually increasing until only the highest bidder remains.
Rational Self-Interest
The principle that individuals tend to make decisions that they perceive to be the best for their own welfare and success.
Collude
A secret or illegal cooperation or conspiracy, especially between parties to deceive or defraud others.
- Familiarize oneself with the assorted auction types and their strategic outcomes.
- Evaluate the behavior of participants in multiple auction frameworks.
Verified Answer
RK
Rohan KapurJul 26, 2024
Final Answer :
D
Explanation :
In an English auction, the item is sold to the highest bidder. Minnie values the cabinet the most at $2,100. However, she only needs to outbid the second-highest bidder, Holly, who values it at $1,600, to win the auction. Therefore, Minnie will win the auction by bidding slightly more than $1,600, not needing to bid her full valuation of $2,100.
Learning Objectives
- Familiarize oneself with the assorted auction types and their strategic outcomes.
- Evaluate the behavior of participants in multiple auction frameworks.