Question 2 How does auction theory predict that bidders will behave in the following four auction types: English, Dutch,

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Question 2 How Does Auction Theory Predict That Bidders Will Behave In The Following Four Auction Types English Dutch 1 (68.79 KiB) Viewed 52 times

Question 2 How does auction theory predict that bidders will behave in the following four auction types: English, Dutch, First Price Sealed Bid and Second Price Sealed Bid? Which of these mechanisms would you advise the government to use when auctioning something of potentially great value to the private sector? Your answer should be based on theory, but make reference to empirical examples. Question 3 Discuss the relative merits of the compensation test and social welfare function approaches to social cost benefit analysis (SCBA) as a means of making public investment decisions. Your answer should address both theoretical and practical considerations. Question 4 With examples, explain how economists (and others) can put a value on something for which there is no existing market. In your answer include a critical assessment of the advantages and disadvantages of the methods of non- market valuation you discuss, and explain the relevance of Hicksian welfare measures in this context. Question 5 Explain and critically assess the challenges that prospect theory offers to the notion of the rational economic agent used in the (traditional) neo-classical economic framework