In a First-Price Sealed-Bid Auction When Bidders Have Private Values

question 56

Multiple Choice

In a first-price sealed-bid auction when bidders have private values, the best bidding strategy is to bid:

• A)your value for the object since this gives you the highest probability of winning the auction.
• B)the value of the second highest bidder since this gives you the highest probability of winning while maximizing your surplus.
• C)something less than your maximum willingness to pay, although how much less depends on a variety of factors.
• D)continuing bidding until you win if you like the object.

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