Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 25

Why is it a good idea to bid your (known) valuation in a second-price, sealed-bid auction? Why is it a bad idea to bid your (known) valuation in a first-price, sealed-bid auction? Explain, with reference to the ''winner's curse,'' why it is an even worse idea to bid what you think your valuation is when you are not exactly sure of its value.