A Seller Knows That There Are Two Bidders for the Object

question 36

Multiple Choice

A seller knows that there are two bidders for the object he is selling.He believes that with probability 1/2, one has a buyer value of $5 and the other has a buyer value of $12 and, with probability 1/2, one has a buyer value of $10 and the other has a buyer value of $30.He knows that bidders will want to buy the object so long as they can get it for their buyer value or less.He sells it in an English auction with a reserve price which he must set before the auction starts.To maximize his expected profits, he should set the reserve price at

• A)$30.
• B)$5.
• C)$12.
• D)$10.
• E)$20.

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Definitions:

Complexity

The state or quality of being intricate or complicated, often characterized by a large number of interdependent parts.

Physical Strain

The stress or discomfort experienced by the body due to physical activities, often leading to fatigue or injury.

Task Value

The perceived worth or importance of a task based on its potential outcomes.

Job Dissatisfaction

A state where an employee feels unhappy or discontent with their job, which can affect their performance and overall well-being.