Auctions

Question 1

English Auction

Answer 1

First-price
Open bid
Ascending

Antiques and artworks

Question 2

Dutch auction

Answer 2

Open-bid

descending auction

Question 3

Sealed-bid first price

Answer 3

Single round
Bidders submit offers which aren’t known to others
Good allocated to bidder with highest price
Winner pays price which they bid

Procurement by companies and organisations
Government project contracts

Question 4

Vickrey Auction

Answer 4

Sealed-bid second price auction

Winner pays price of second highest bid

Question 5

Dominant strategy

Answer 5

Better than other strategies for one player, no matter how that player’s opponents may play
No dominant strategy for first-price sealed bid/dutch auction
In Vickrey auction/english auction, should bid true value

Question 6

Revelation principle

Answer 6

Vickrey auction equivalent to english auction

Question 7

Revenue Equivalence Theorem

Answer 7

All 4 auction protocols produce same expected revenue to auctioneer provided:
Rational
Risk Neutral
Private value assumption holds
Symmetric

Question 8

Winner’s Curse

Answer 8

Value is unknown, paying more for item that it’s worth
e.g 3g spectrum licence auctions
Prevent by taking into account/use of open-bid auctions

Question 9

Corruption

Answer 9

Auctioneer can be corrupted/Second-price procurement auctions illegal in Italy