Asked by Tristan Jansen on Apr 28, 2024
Verified
An auctioneer allows bidders to examine a jar of pennies, but he does not allow them to open the jar and count the pennies.The jar is then sold by means of an English auction.Economists call an auction of this type a private-values auction, since opinions differ.
Private-Values Auction
A type of auction in which each bidder knows their own valuation of the item for sale, but this valuation is private and may differ from that of other bidders.
English Auction
A type of auction where bidders openly bid against one another, and the item is sold to the highest bidder.
Examine
To inspect or scrutinize carefully.
- Grasp the concept of private and common values in auctions and their impact on bidding strategies.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
False
Explanation :
This scenario describes a common value auction, not a private-values auction, because the actual value (the number of pennies in the jar) is the same for everyone, even though their estimates of that value may differ. In a private-values auction, the value of the item up for bid is genuinely different for each bidder, based on their personal preferences, uses, or perceptions.
Learning Objectives
- Grasp the concept of private and common values in auctions and their impact on bidding strategies.