Scenario: Tom, Pat, Arthur, and Julie are participating in a second-price auction for a good. Tom values the good at $150, Pat values it at $180, Arthur values it at $250, and Julie values it at $200.
-Refer to the scenario above.Julie should place a bid of ________.
A) $300
B) $150
C) $200
D) $250

Question

Quizplus · Accepted Answer

In a second-price auction, the winner pays the second-highest bid. Therefore, Julie should bid her true valuation of the good, which is $200, to maximize her utility without risking paying more than she values the item.

Scenario: Tom, Pat, Arthur, and Julie Are Participating in a Second-Price