The following graph shows the bid value and probability of winning an auction for an oil painting under a first-price sealed bid auction with private values. The bidder is willing to pay a maximum of £2000 for the oil painting. Refer to the graph to answer the question.
The line S has a positive slope which shows that the _____.
A) probability of winning the auction rises as the bidder increases the bid.
B) the potential gains from winning the auction increases as the bid value increases.
C) the private value of the bidder is influenced by the changes in the bid values.
D) the optimal bid is equal to the bidder's maximum willingness to pay.
Correct Answer:
Verified
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