What Is the Optimal Bid for a Descending-Price Auction If

question 23

Multiple Choice

What is the optimal bid for a descending-price auction if the bidder's reservation price is 8,the lowest possible bid is 2,and there are three bidders?

• A) 2.
• B) 6.
• C) 7.
• D) 8.
• E) None of the above.

---

Definitions:

Geometric Average

A method of calculating the average rate of return that accounts for compounding, commonly used for investment portfolios.

Total Returns

Total returns include all sources of investment return including capital gains, dividends, and interest, measured over a specific time period.

Variance

A statistical measure of the dispersion of data points in a data series around the mean.

Total Percentage Return

The total return on an investment, expressed as a percentage, that includes all dividends, interest, and capital gains.