Question
The restaurant Serendipity 3, decided to discontinue their Golden Opulence Ice-cream Sundae, normally sold for $1000 a serving. For the famous dish's finale, they decided
The restaurant Serendipity 3, decided to discontinue their Golden Opulence Ice-cream Sundae, normally sold for $1000 a serving. For the famous dish's finale, they decided to auction the last serving to the restaurant's patrons that night. It sold for $2550. 40 patrons made bids and the four highest bids were as follows:
Bidder 1: $2600
Bidder 2: $2550
Bidder 3: $2500
Bidder 4: $2400
Assuming that bidders learned auction theory and made their bids optimally, which of the following statementsis true?
a) The sundae was sold with a second-price sealed bid auction and the bidder with the highest valuation won.
b) The sundae was sold with a second-price sealed bid auction, but the winner was not necessarily the one with the highest valuation.
c) The winner of the auction was a victim of the "winner's curse" because the sundae is worth less than $2550.
d) If bidder 1's valuation was exactly $2600, we could conclude that the sundae was sold with an English auction.
e) Both b. and d.
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