Correlated values estimates in an auctions setting means that:
A) A bidders private value estimate affect, and are affected by, the private value estimates of other bidders.
B) Bidders know the value that they place on the object and the value placed on the object by the other bidders.
C) The winner has the most pessimistic estimate of the object's value.
D) The Bayesian Nash equilibrium is the result of a properly constructed incentive- compatible second price auction.
E) None of the above.

Question

Quizplus · Accepted Answer

Correlated values in an auction setting imply that a bidder's valuation of the auctioned item is influenced by, and also influences, the valuations of other bidders. This interdependence contrasts with independent private values, where each bidder's valuation is personal and unaffected by others' valuations.

Correlated Values Estimates in an Auctions Setting Means That