Scenario: a Common Game Played in Many MBA-Level Classes on Microeconomic

question 134

Multiple Choice

Scenario: A common game played in many MBA-level classes on microeconomic theory and strategy is the dollar auction game. In this game, the professor takes on the role of auctioneer, offering to auction off a dollar bill to the highest bidder. This is an open-outcry auction, so students just shout out their bids. The one catch to the game is that the winning bidder pays her bid (the highest bid received) , but the second-highest bidder must also pay the auctioneer the amount of her highest bid.
-Refer to the scenario above.In the dollar auction,what is your equilibrium bidding strategy?

• A) Bid $0.50
• B) Bid $0.99
• C) Bid $1.00
• D) Don't bid at all

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