In an english auction, the dominant strategy is to...?
B. bid beyond your reservation price
C. there is no dominant strategy
D. bid up tp half your reservation price
E. maximize expected utility
Answer:
The correct answer is A. You do not want to bid beyond your reservation price.
B: You never want to bid beyond your reservation price because the benefit of doing so does not exceed the cost. Your reservation price is the price at which you value the product, it would not make any economical sense to bid above this price.
C: This is incorrect because in an english auction, there is a dominant strategy specific to each individual, which is to go as high as your reservation price.
D: Bidding half of your reservation price does not make any economical sense because you value the product at a higher degree and you obviously want the product and are willing to pay the reservation price for the product.
E: This answer was thrown into the question to confuse
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