Asked by Taylor A. Healey on Jun 04, 2024
Verified
In common value auctions
A) Every bidder 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 is unknown to bidders
Bid-rigging
A fraudulent scheme where businesses collude to control the bidding process, often at the expense of fairness.
Common Value Auctions
Auctions in which the item for sale has a value that is equally unknown to all bidders, but ultimately, the value is the same for everyone.
Bidders
Individuals or entities that offer to pay a specific price for goods, services, or assets, often in the context of an auction.
- Understand the concept of common value auctions and how they differ from private value auctions.
Verified Answer
OM
Orlando MejiaJun 04, 2024
Final Answer :
D
Explanation :
In common value auctions, the true value of the item being auctioned is unknown to the bidders. Although bidders may have their own estimates of the value, these estimates can differ from one another because of differences in information, expertise, or analysis. Therefore, bidders may face uncertainty about the accuracy of their estimates, which can lead to strategic behavior and risk management.
Learning Objectives
- Understand the concept of common value auctions and how they differ from private value auctions.