You are in the market for a new house and have decided to bid for a house

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You are in the market for a new house and have decided to bid for a house at auction. You believe that the value of the house is between $125,000 and $150,000, but you are uncertain as to where in the range it might be. You do know, however, that the seller has reserved the right to withdraw the house from the market if the winning bid is not satisfactory.
a. Should you bid in this auction? Why or why not?
b. Suppose you are a building contractor. You plan to improve the house and then to resell it at a profit. How does this situation affect your answer to part a? Does it depend on the extent to which your skills are uniquely suitable to improving this particular house?
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Microeconomics

ISBN: 978-0132857123

8th edition

Authors: Robert Pindyck, Daniel Rubinfeld

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