In a common-value setting
A)Oral auctions tend to return higher prices
B)Sealed bid auctions tend to return higher prices
C)Vickery auctions tend to return higher prices
D)Rotating bid auctions tend to return higher prices

Question

​In a common-value setting
A)​Oral auctions tend to return higher prices
B)Sealed bid auctions tend to return higher prices
C)Vickery auctions tend to return higher prices
D)​Rotating bid auctions tend to return higher prices

Quizplus · Accepted Answer

In a common-value setting, bidders are uncertain of the exact value of the item being auctioned. Oral auctions provide them with the opportunity to gauge the reactions of other bidders and adjust their bids accordingly. This can lead to higher prices as bidders may be willing to pay more when they see others interested in the item. Sealed bid auctions can also result in high prices, but they do not allow bidders to get a sense of the competition, which may lead to lower bids. Vickery auctions are often used for common value settings and involve bidders submitting sealed bids, but the winner pays the second-highest bid. Rotating bid auctions are not commonly used and do not necessarily result in higher prices.

​In a Common-Value Setting

In a Common-Value Setting