At Toivo’s auction house in Ishpemming, Michigan, a beautiful stuffed moose head is being sold by auction. There are 5 bidders in attendance: Aino, Erkki, Hannu, Juha, and Matti. The moose head is worth $100 to Aino, $20 to Erkki, and $5 to each of the others. The bidders do not collude and they don’t know each others’ valuations.
(a) If the auctioneer sells it in an English auction, who would get the moose head and approximately how much would the buyer pay?
(b) If the auctioneer sells it in a sealed-bid, second-price auction and ifno bidder knows the others’ values for the moose head, how much should Aino bid in order to maximize his expected gain? _________. How much should Erkki bid? ______. How much would each of the others bid? _________. Who would get the moose head and how much would he pay? ________.