Some popular reality television programs follow people who buy the contents of abandoned storage lockers at public auctions. In most cases, several storage lockers are sold in sequence during a particular auction. Occasionally, one of the buyers will purposefully bid much more than the expected value of a particular storage locker in order to intimidate the other bidders. What is a plausible explanation for these excessive bids?
A) The buyer is trying to establish a reputation that may affect the outcome of later auctions.
B) The excessive bids may be rational if they occur during the last auction of the day.
C) The bidder is trying to establish a first-mover advantage, but only if they occur during the first auction of the day.
D) The excessive bids represent a form of tacit collusion among the buyers.

Question

Quizplus · Accepted Answer

The buyer is trying to establish a reputation as a serious, deep-pocketed bidder who should be taken seriously by other buyers. This could help them get better deals at future auctions or intimidate competitors who bid against them in the same market.

Some Popular Reality Television Programs Follow People Who Buy the Contents