Concerning auctions,what is the definition of a "common-values setting"?
A)Bids are submitted using open outcries.
B)Bids are submitted simultaneously,and the highest is selected as the winner.
C)Bidders value the object the same,but are uncertain as to what that value is.
D)Bids are submitted by syndicates of cooperating bidders.

Question

Quizplus · Accepted Answer

A "common-values setting" refers to a situation where bidders value the object being auctioned in the same way but are uncertain as to what that value actually is. This uncertainty arises because the value is based on some common variable, such as the future price of a commodity, that is difficult to predict accurately. In such a setting, bidders must use their own information to estimate the common value and bid accordingly. This type of auction is often used for natural resource leases, where the value of the lease depends on the future price of the extracted resource.

Concerning Auctions,what Is the Definition of a "Common-Values Setting