The optimal bidding strategy in an incomplete-information, sealed-bid, first-price auction with independent private values is:

Answers:

a.

to submit a bid that is higher than his or her private valuation of the item. How much higher depends on the number of bidders participating in the auction.

b.

to submit a bid that is equal to his or her private valuation of the item.

c.

to submit a bid that is equal to the private valuation of the next-highest bidder.

d.

to submit a bid that is lower than his or her private valuation of the item.How much lower depends on the number of bidders participating in the auction.

e.

strategically equivalent to the optimal bidding strategy in sealed-bid, second-price auction.