Suppose that five bidders in an oral (or English) auction that are interested in purchasing a Princess Beanie Baby. The bidders have valuations of $21, $18, $15, $12, and $9. Assume that bids can only be made in $1 increments, and that they will bid up to and including their valuation.

1) If there is no bid rigging going on, what would be the winning bid?

2) Suppose the bidders with the three highest valuations attempt to collude to bring the winning bid price down. If they are successful, what price would they pay for the Beanie Baby?

3) If a seller is concerned about collusion among bidders, which one of the following changes to the auction should the seller make? a. Hold more frequent and smaller auctions instead of infrequent large auctions. b. Publicly announce the amount of the winning bids. c. Publicly announce the name of each auction's winner. d. Switch to a sealed-bid first-price auction.