Consider an antique auction where bidders have independent private values. There are two bidders, each of whom perceives that valuations are uniformly distributed between $100 and $1,000. One of the bidders is Sue, who knows her own valuation is $200. What is Sue's optimal bidding strategy in a first-price, sealed-bid auction?
A. Submit a bid that is less than $150.
B. Submit a bid of $200.
C. Submit a bid of $150.
D. Yell "mine" when the bid reaches $150.
Answer: C
Economics
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