Author Question: How do participants in an auction respond to the problem of the winner's curse? a. They bid more ... (Read 45 times)

codyclark · **on:** Jul 1, 2018

How do participants in an auction respond to the problem of the winner's curse?
a. They bid more aggressively to win the auction and avoid the curse.
b. They exit the auction because winning can only be a bad sign of the object's worth.
c. All bid less aggressively, so that the winner ends up not regretting having won.
d. The winner regrets having won the auction.

Question 2

Suppose that your personal valuation for a painting is 200 . Which auction format would induce you to bid more?
a. First price.
b. Second price.
c. You would bid the same in any format.
d. Depends on the environment.