13 May WHAT IS YOUR EXPECTED PROFIT FROM THIS AUCTION?
What is your walk-away price?Include a readable printout of your table as Exhibit 2-C.Problem 3 – Auctions & Reserve PricesPlease consider the following auction problemYou have a single unit of an indivisible good to sell. You have two potential buyers, and decide to auction the good. You do not know the buyers’ values (i.e. their maximum willingness to pay), but you do know that in each case these are uniformly distributed on [0, 1]. In other words, all values between $0 and $1 are equally likely (the valuations of the two buyers are independent). If it is unsold, the good is worth nothing to you (e.g. because it is perishable). As the auctioneer, you raise the price in very small increments starting from $0. The buyers are instructed to keep their hands up so long as they are willing to buy at the current price (i.e., so long as their value exceeds the price). When the first bidder drops out (puts his hand down), the other bidder gets the good at the price just called. What is your expected profit from this auction? Include an Exhibit to support your argument as Exhibit 3-A.You wonder whether profits can be increased by setting a reserve price. Everything else remains the same, but you are now allowed to announce a reserve price R. This is the lowest price at which you are willing to sell – so you start raising the price from $R instead of $0. The risk is that both people drop out at $R itself, in which case you make nothing. If one person drops out right away, the good is sold at $R to the remaining bidder. If both are still in the bidding, the auction proceeds as before with the price being increased until one person remains in the bidding. What is the best reserve price? At that reserve price, what is the expected profit? At that reserve price, what is the standard deviation of profit?
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.