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Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
An example of a common value auction would be bidding on [...]. Each bidder could estimate the value; but until someone buys it, no one knows with certainty the true value.
Answer
a jar containing many coins

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
An example of a common value auction would be bidding on [...]. Each bidder could estimate the value; but until someone buys it, no one knows with certainty the true value.
Answer
?

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
An example of a common value auction would be bidding on [...]. Each bidder could estimate the value; but until someone buys it, no one knows with certainty the true value.
Answer
a jar containing many coins
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which there is some actual common value that will ultimately be revealed after the auction is settled. Prior to the auction’s settlement, however, bidders must estimate that true value. An example of a common value auction would be bidding on <span>a jar containing many coins. Each bidder could estimate the value; but until someone buys the jar and actually counts the coins, no one knows with certainty the true value.<span><body><html>

Original toplevel document

3.8. Auctions as a Way to Find Equilibrium Price
> Sometimes markets really do use auctions to arrive at equilibrium price. Auctions can be categorized into two types depending on whether the value of the item being sold is the same for each bidder or is unique to each bidder. <span>The first case is called a common value auction in which there is some actual common value that will ultimately be revealed after the auction is settled. Prior to the auction’s settlement, however, bidders must estimate that true value. An example of a common value auction would be bidding on a jar containing many coins. Each bidder could estimate the value; but until someone buys the jar and actually counts the coins, no one knows with certainty the true value. In the second case, called a private value auction , each buyer places a subjective value on the item, and in general their values differ. An example might be an auction for a unique p

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