1) You have been out of college for a while and are thinking about adding more diversity to your investment portfolio. You attend an art auction where you decide to bid on a painting by a contemporary artist. There are 9 other bidders (i.e. 10 bidders total) participating in the auction. Assume that all bidders (yourself included) are risk neutral. a. You receive a signal of $200,000 for the common value of the painting. You think back to your undergrad days and realize that your knowledge of auction theory will help you in this situation. You use optimal bidding strategy to place your bid for the painting. How much do you bid in a first-price sealed bid auction? b. You win the auction from part (a). You do some research and discover that there is a 10% chance that your painting will sell for $200,000 in one year, and a 90% chance that it will sell for $80,000 in one year's time. You know that you will receive $1000 worth of satisfaction from having the painting on your wall for the year. If you had not purchased the painting you would have instead bought a government bond with certain rate of return equal to .033. Based on this new information, do you regret purchasing the painting? Explain. 1) You have been out of college for a while and are thinking about adding more diversity to your investment portfolio. You attend an art auction where you decide to bid on a painting by a contemporary artist. There are 9 other bidders (i.e. 10 bidders total) participating in the auction. Assume that all bidders (yourself included) are risk neutral. a. You receive a signal of $200,000 for the common value of the painting. You think back to your undergrad days and realize that your knowledge of auction theory will help you in this situation. You use optimal bidding strategy to place your bid for the painting. How much do you bid in a first-price sealed bid auction? b. You win the auction from part (a). You do some research and discover that there is a 10% chance that your painting will sell for $200,000 in one year, and a 90% chance that it will sell for $80,000 in one year's time. You know that you will receive $1000 worth of satisfaction from having the painting on your wall for the year. If you had not purchased the painting you would have instead bought a government bond with certain rate of return equal to .033. Based on this new information, do you regret purchasing the painting? Explain