Which of the Following Statements About Winner's Curse Is Wrong

question 22

Multiple Choice

Which of the following statements about winner's curse is wrong?

• A)Overbidding occurs when bidders are uncertain about the true value of the good.
• B)The phenomenon occurs in common value auctions.
• C)When intelligent bidders shade their bids,sellers receive more money with a sealed-bid auction than an English auction
• D)The phenomenon will not occur in private value auctions.

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Definitions:

Market System

An economic system where decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.

Self-interest

Acting in a way that is most beneficial for oneself.

Private Property

The right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property.

Economically Most Efficient

The state where resources are allocated in a way that maximizes the production of goods and services at the lowest cost.