Asked by
John Michael Ramos
on Oct 14, 2024
Verified
An antique cabinet is being sold by means of an English auction.There are four bidders, Zelda, Clara, Anneli, and Diana.These bidders are unacquainted with each other and do not collude.Zelda values the cabinet at $800, Clara values it at $550, Anneli values it at $1,300, and Diana values it at $300.If the bidders bid in their rational self-interest, the cabinet will be sold to
A) Anneli for about $1,300.
B) Zelda for about $800.
C) either Anneli or Zelda for slightly more than $800.Which of them actually gets it is randomly determined.
D) Anneli for slightly more than $800.
E) None of the above.
English Auction
A bidding process where participants bid openly against one another, with each subsequent bid higher than the previous, until the highest bid wins.
Rational Self-Interest
The principle that individuals prioritize actions that result in the most personal benefit, assuming rational decision-making processes.
Collude
When two or more firms agree to limit competition between themselves, often to set prices or output levels to maximize collective profits.
- Gain an understanding of different auction models and their strategic impacts.
- Examine the conduct of bidders across various auction environments.
Verified Answer
AM
Learning Objectives
- Gain an understanding of different auction models and their strategic impacts.
- Examine the conduct of bidders across various auction environments.