17.4 A dealer decides to sell an oil painting by means of an English auction with a reservation price of slightly below $81,000. If he fails to get a bid as high as his reservation price, he will burn the painting. There are two bidders. The dealer believes that each bidder's willingness to pay will take one of the three values, $90,000, $81,000, and $45,000. The dealer believes that each bidder has a probability of 1/3 of having each of these three values. The probability distribution of each buyer's value is independent of that of the other's. Assuming that the two bidders bid rationally and do not collude, the dealer's expected revenue from selling the painting is slightly less than (a) $73,000. (0) $81,000. (0) $45,000. (d) $63,000. 17.1 First Fiddler's Bank has foreclosed on a home mortgage and is selling the house at auction. There are three bidders for the house, Jesse, Sheila, and Elsie. First Fiddler's does not know the willingness to pay of any of these bidders but on the basis of its previous experience believes that each of them has a probability of 1/3 of valuing the house at $700,000, a probability of 1 / 3 of valuing it at $500,000, and a probability of 1/3 of valuing it at $200,000. First Fiddlers believes that these probabilities are independent between buyers. If First Fiddler's sells the house by means of a second-bidder sealed-bid auction (Vickrey auction), what will be the bank's expected revenue from the sale? (Choose the closest answer.) (a) $500,000 (0) $474,074 (6) $466,667 (4) $666,667 (6) $266,667