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Auction Theory Quiz Insights

The document consists of a quiz on auction theory, featuring multiple choice and short answer questions. Key concepts covered include second-price sealed-bid auctions, Dutch auctions, and the strategies involved in first-price and Bayesian auctions. Correct answers are provided for the multiple choice questions, while the short answer questions prompt deeper analysis of auction strategies.

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170 views2 pages

Auction Theory Quiz Insights

The document consists of a quiz on auction theory, featuring multiple choice and short answer questions. Key concepts covered include second-price sealed-bid auctions, Dutch auctions, and the strategies involved in first-price and Bayesian auctions. Correct answers are provided for the multiple choice questions, while the short answer questions prompt deeper analysis of auction strategies.

Uploaded by

anair
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd

Auction Theory Quiz

🔢 Section A: Multiple Choice Questions


Q1. In a second-price sealed-bid auction, the winner pays:
A. Their own bid
B. The second-highest bid
C. The average of all bids
D. The reserve price

✅ Correct Answer: B

Q2. Which auction format is truth-telling (bidding your true value) a dominant
strategy?

A. First-price sealed-bid
B. Dutch auction
C. Second-price sealed-bid (Vickrey auction)
D. English auction with hidden reserve

✅ Correct Answer: C

Q3. What is a Dutch auction?

A. Bids are made in ascending order


B. The price drops until a bidder accepts
C. Bidders submit sealed envelopes
D. The item is sold to the lowest bidder

✅ Correct Answer: B

𝑣
Q4. In a first-price sealed-bid auction, a rational bidder with value

v should:

𝑣
A. Bid exactly

𝑣
B. Bid less than

𝑣
C. Bid more than

v
D. Not bid at all

✅ Correct Answer: B

Q5. Which of the following is true about Bayesian auctions?

A. Bidders know everyone’s valuation


B. Valuations are common knowledge
C. Each bidder has private information and beliefs
D. Only one bidder is rational

✅ Correct Answer: C

✍️ Section B: Short Answer Questions


Q6. Explain why bidding truthfully is a dominant strategy in a Vickrey auction.

Q7. In an English auction, when should a rational bidder stop raising their bid?
Q8. Compare a first-price and second-price sealed-bid auction in terms of strategy.

Q9. What role does a reserve price play in an auction?

Q10. A bidder values an item at ₹100. In a first-price sealed-bid auction, what bid
should they place if they believe the highest competing bid is likely around ₹80?

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