15-2. Two Bidder Auction You hold an auction on eBay and expect two bidders to show up....
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15-2. Two Bidder Auction You hold an auction on eBay and expect two bidders to show up. You estimate that each bidder has a value of either $5 or $8 for the item, and you attach probabilities to each value of 50%. Your own value for the item is zero. You can set a reserve price, a price below which you will not accept bids for the item. What reserve price should you set, and what are your expected profit (surplus) from auctioning the item with a reserve price?
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Managerial Economics A Problem Solving Approach
ISBN: 9780324359817
1st Edition
Authors: Luke M. Froeb, Brian T. McCann
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