Which of the following statements about winner's curse is wrong?
A)Overbidding occurs when bidders are uncertain about the true value of the good.
B)The phenomenon occurs in common value auctions.
C)When intelligent bidders shade their bids,sellers receive more money with a sealed-bid auction than an English auction
D)The phenomenon will not occur in private value auctions.

Question

Quizplus · Accepted Answer

The statement that "When intelligent bidders shade their bids, sellers receive more money with a sealed-bid auction than an English auction" is incorrect as the opposite is true. In a sealed-bid auction, bidders are more likely to bid their true value as they do not know what their competitors are bidding, leading to higher revenue for the seller. In contrast, in an English auction, bidders can see what others are bidding and may hesitate to bid their true value, leading to potentially lower revenue for the seller.

Which of the Following Statements About Winner's Curse Is Wrong