Question

You are a bidder in an independent private values auction, and you value the object at $4,000. Each bidder perceives that valuations are uniformly distributed between $1,500 and $9,000. Determine your optimal bidding strategy in a first-price, sealed-bid auction when the total number of bidders (including you) is:

a. 2
b. 10 .
c. 100 .

Answer 1

In a first-price sealed-bid auction, the optimal bidding strategy is to bid your true value.

Step-by-step explanation:

In a first-price sealed-bid auction, the optimal bidding strategy is to bid your true value. In this case, your value is $4,000. This means that regardless of the number of bidders, your optimal bid would be $4,000.