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A company was planning to bid a lease contract of an oil field for sale through an auction and approached you for advice. Please explain
A company was planning to bid a lease contract of an oil field for sale through an auction and approached you for advice. Please explain the following issues to the manager of the company:
a. What kind of information structure (independent private values, affiliated values, or common values) is for this lease contract?
b. What is the winner's curse in the context of auction? Does it apply to this situation?
c. What kind of bidding strategy would you suggest the company to adopt if it is a second price sealed bid auction? Why?
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