Question

Scenario: Four friends–Tom, Bill, Jeff, and Roger–are participating in an English auction. Tom values the

good being auctioned at $500, Bill values it at $210, Jeff values it at $350, and Roger values it at $625.

150)

Refer to the scenario above. If they are the only bidders in the auction and each of

them uses his optimal strategy, who will win?

A)

Tom

B)

Roger

C)

Bill

D)

Jeff

151)

Refer to the scenario above. If they are the only bidders in the auction, Bill will

continue to bid as long as bidding is below ________.

A)

$500

B)

$210

C)

$420

D)

$625

152)

Refer to the scenario above. If they are the only bidders in the auction, Tom will no

longer bid when bidding reaches ________.

A)

$200

B)

$350

C)

$210

D)

$500

153)

Refer to the scenario above. Suppose there are several other bidders in the auction.

Roger will win the auction only if ________.

A)

all the bidders are risk averse

B)

all the other bidders bid above $625

C)

all the other bidders bid below $625

D)

all the other bidders are risk lovers

154)

Refer to the scenario above. If they are the only bidders in the auction, Jeff will win

the auction if ________.

A)

Tom and Roger bid up to their value for the good while Bill and Jeff bid below

their value for the good

B)

Bill and Jeff bid up to their value for the good while Tom and Roger stop

bidding at $100 and $200, respectively

C)

each of them bids up to his value for the good

D)

Tom and Jeff bid up to their value for the good while Roger and Bill bid below

their value for the good

155)

Refer to the scenario above. If they are the only bidders in the auction and each bidder

uses his optimal strategy, the maximum price the winner is likely to pay is ________.

A)

$350

B)

$500

C)

$210

D)

$625

156)

Refer to the scenario above. If they are the only bidders in the auction and each bidder

bids up to his value for the good, the winner will earn a surplus of ________.

A)

$150

B)

$500

C)

$625

D)

$125

157)

Refer to the scenario above. Which of the following is true in this case?

A)

The dominant strategy equilibrium is the Nash equilibrium.

B)

There is no dominant strategy equilibrium.

C)

The dominant strategy equilibrium is not the Nash equilibrium.

D)

There is no Nash equilibrium.

158)

Refer to the scenario above. In this case, a Nash equilibrium occurs if ________.

A)

Bill and Jeff bid up to their value for the good while Tom and Roger stop

bidding at $100 and $200, respectively

B)

each of them bids up to their value for the good

C)

Tom and Roger bid up to their value for the good while Bill and Jeff bid below

their value for the good

D)

Tom and Jeff bid up to their value for the good while Roger and Bill bid below

their value for the good

159)

Refer to the scenario above. If these four friends are the only bidders and each bidder

uses his optimal strategy, the owner of the good will earn an expected revenue of

________.

A)

$625

B)

$350

C)

$210

D)

$500

Answer 1