An auctioneer allows bidders to examine a jar of pennies, but he does not allow them to open the jar and count the pennies.The jar is then sold by means of an English auction.Economists call an auction of this type a private-values auction, since opinions differ.

Question

Quizplus · Accepted Answer

This scenario describes a common value auction, not a private-values auction, because the actual value (the number of pennies in the jar) is the same for everyone, even though their estimates of that value may differ. In a private-values auction, the value of the item up for bid is genuinely different for each bidder, based on their personal preferences, uses, or perceptions.

An Auctioneer Allows Bidders to Examine a Jar of Pennies