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Managerial Economics, 8e
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Ebook
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Diagnostic/Quiz+ Multiple-Choice Quizzes
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Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
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Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
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Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
Quiz Result
Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
Study Plan
Ebook
Chapter Outline
Diagnostic/Quiz+ Multiple-Choice Quizzes
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Chapter Review
Vocabulary Flashcards
Sentence Completion Exercises
Spreadsheet Exercises
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Chapter 13
Auctions
Chapter Review
There are four types of auction mechanisms: English, Dutch, and first- and second-price sealed-bid auctions.
In common-value auctions with symmetric, risk-neutral bidders and independent signals, the auction mechanism chosen makes no difference. All mechanisms generate the same expected revenues.
There is no need for managers to consider the bidding strategies of others in English and second-price auctions. In English auctions, managers should bid up to their reservation prices. In second-price auctions, managers should bid their reservation prices.
Dutch and sealed-bid auctions have no dominant strategy. Optimal behavior in these auctions is conditioned on beliefs about the strategies of others. In each auction, managers must consider the reservation price of the second-highest bidder. Then managers need to bid just above this price.
When selling goods, managers should choose reserve prices that reflect this guideline:
Optimal reserve price = Value of the object being auctioned off, if it does not sell + (Managerial estimates of the highest reservation price divided by two)
Auctions are often more efficient than posted-price schemes because they can better discriminate among consumers with differing reservation prices. Most auction designs ensure that the consumer with the highest reservation price wins the auction.
Auctions are useful if demand is unknown. Managers can use them to induce consumers to reveal their preferences before managers set a price. By knowing the demand before setting a price, managers increase revenues.
When bidding in sealed-bid, common-value auctions, managers need to recognize the tendency to bid too high. This tendency results in the winner's curse, where the high bidder wins the auction but pays more than the object's true value.