Consider three bidders who have private values that are independently and unifor
ID: 1115655 • Letter: C
Question
Consider three bidders who have private values that are independently and uniformly distributed between 0 and 100, Suppose that these values happen to be u1 = 25, v2 = 30, and v3 = 10. Then the equilibrium price in the second-price auction is (A) 25; (B) 30; (C) 10; (D) 20. (continued) The equilibrium price in the first-price auction is (A) 25; (B) 30; (C) 10; (D) 20 (continued) The equilibrium price in the English auction is (A) 25; (B) 30; (C) 10; (D) 20. (continued) The equilibrium price in the Dutch auction is (A) 25; (B) 30; (C) 10; (D) 20Explanation / Answer
Answer : The equilibrium in the second price auction is (A) 25. Because in second price auction person bid on a sealed paper and simultaneously hand over this paper to auctioneer. After that auctioneer open this and announce him as a second highest bidder and he pay the bid.
The equilibrium in the first price auction is (B) 30. It similar to second price auction. The main part of this is that auctioneer announce the person as highest bidder and win then the person pay bid.
The equilibrium price in the English auction is (B) 30. In this case the person bid as possible as according to his sufficient budget. Finally, if the person is highest bidder then he pay.
The equilibrium price in the Dutch auction is (B) 30. In that case auctioneer set the highest price to deter the highest payer and then after lowed untill the person win.