If bidders are likely to be risk-averse:
A) sellers should use a first-price auction.
B) sellers should use a second-price auction.
C) auctions will not provide surplus for sellers.
D) sellers should use a posted-price strategy.
E) Dutch auction rules will yield the greatest profit to sellers.

Question

Quizplus · Accepted Answer

Risk-averse bidders tend to bid higher in a first-price auction to avoid the risk of losing, which can lead to higher revenues for sellers.

If Bidders Are Likely to Be Risk-Averse