A Seller Decides to Sell an Object by Means of a Sealed-Bid

question 1

Multiple Choice

A seller decides to sell an object by means of a sealed-bid second-price auction without a reservation price. There are two bidders. The seller believes that for each of the two bidders there is a probability of that the bidder's value for the object is $400 and a probability of that the bidder's value is $300. The seller believes that these probabilities are independent between bidders. If the bidders bid rationally, what is the seller's expected revenue from the auction?

• A) $325
• B) $400
• C) $350
• D) $320
• E) $340

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