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10 September, 16:47

9) What is the dominant strategy for bidders in an English oral auction?9) A) Bid until the previous bid price equals the reservation price of the last bidder. B) Keep bidding until all other bidders quit, regardless of your reservation price. C) Bid until the first-price and second-price bids are equal. D) Stop bidding once the price exceeds your reservation price.

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  1. 10 September, 18:55
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    Answer: B) Keep bidding until all other bidders quit, regardless of your reservation price.

    Explanation: Familiar to English auctions, the bidders are aware of the prices of items on sale and the numbers of other bidders. This price is known as the reserve or reservation price which is the limit on the price of the item on sale set by the seller (that is the lowest price the seller is willing to sell the item). The bids start at a low price and keeps coming in until there are no more bids irregardless of the reservation price set. It probably depends on how much you value the item on sale and are willing to pay for it. Not necessarily on the reservation price.
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