The following table shows five bidders’ willingness to pay for a piece of art that is being auctioned by an auction house.
BidderWillingness to pay
John ……………………..$10,000
James ……………………..$20,000
Tim ……………………..$30,000
Ryan ……………………..$35,000
Alex ……………………..$40,000
a. Assuming that this is an English auction, what is each player’s optimal bidding strategy?
b. Assume that this is a descending Dutch auction and all bidders are risk neutral. The bidding starts at $50,000 and it falls by $1 every minute. Each bidder knows his or her own valuation but does not know the other valuations. What is each player’s optimal bidding strategy?