Asked by Edward Miller on Mar 10, 2024
Verified
In common value auctions
A) Bidders do not know the value of the object being sold
B) Each bidder makes the same estimate of the value of the good
C) All bidders know the estimates of the others
D) The true value of the item differs across bidders
Common Value Auctions
Auctions in which the item for sale has the same value to all bidders, but the bidders have different information about the item's actual value.
True Value
The actual, inherent worth of an item or phenomenon, often considered in contrast to its market value or perceived value.
Bidders
Individuals or entities that offer to pay a certain price for goods, services, or assets in an auction or competitive bidding process.
- Absorb the essence of common value auctions and the manner in which they differ from private value auctions.
Verified Answer
KD
Kalill DecletMar 10, 2024
Final Answer :
A
Explanation :
In common value auctions, bidders do not know the exact value of the object being sold but try to estimate it, which contrasts with private value auctions where the value of the item is known and differs across bidders.
Learning Objectives
- Absorb the essence of common value auctions and the manner in which they differ from private value auctions.