In a Dutch auction with rational bidders, it sometimes happens that the object being sold goes to someone whose value for the object is not as high as that of some other bidder(s).

Question

Quizplus · Accepted Answer

This is because in a Dutch auction, the price starts high and then gradually decreases until a bidder is willing to accept the price. As a result, some bidders may drop out before the price reaches their true value for the object, allowing other bidders with lower values to win the auction.

In a Dutch Auction with Rational Bidders, It Sometimes Happens