Simple auctions 1

Question 1

What is the social surplus in a simple auction?

Answer 1

V

Question 2

What makes a simple auction efficient?

Answer 2

If the winner is the bidder with the highest valuation (social surplus maximised)

Question 3

What is the difference between an English auction and an English Outcry?

Answer 3

English outcry: Only the bidders announce prices
English: Only the auctioneer announces prices

Question 4

What version of the English auction is used by economists?

Answer 4

Japanese button auction

Question 5

What is the main difference in outcome between the English and English outcry auction?

Answer 5

How you bid in the English outcry auction depends on how others bid, meaning there is no dominant strategy in the outcry auction.

Question 6

What is a vickrey auction?

Answer 6

simultaneous, 2nd price auction where bids are submitted through sealed bids.

Question 7

Under what circumstances are bidding decisions in the English auction and the Vickrey auction identical?

Answer 7

• Bidders are rational
• Bidders know perfectly their valuation (and they don’t change)
• Valuations are private