In a common-value auction
A)Every bidder knows the exact value of the item being auctioned
B)Each bidder knows everyone else's value of the item
C)The value is the same for all the bidders
D)All of the above

Question

​In a common-value auction
A)​Every bidder knows the exact value of the item being auctioned
B)Each bidder knows everyone else's value of the item 
C)The value is the same for all the bidders
D)​All of the above

Quizplus · Accepted Answer

In a common-value auction, the value of the item being auctioned is the same for all bidders, but not necessarily known by them. Bidders may have different opinions about the value of the item based on their own information and assessment, leading to strategic bidding behavior. However, the exact value is usually uncertain or unknown, creating a situation of risk and potential for information asymmetry. Therefore, the best choice is C, as A and B are not true in general.

​In a Common-Value Auction

In a Common-Value Auction