(Solution Download) If some auction participants for crude oil field leases have


If some auction participants for crude oil field leases have estimates that the oil in the ground is worth $1.2 million, $1.3 million, or $1.5 million with certainty; and other auction participants have estimates that the same oil field lease is worth $1.1 million, $1.3 million, or $1.5 million with certainty; and a third group of auction participants have estimates that the same oil field lease is worth $1.1 million, $1.2 million, or $1.3 million, and all three forecasts contain the true common value, what is that value? How would you as auctioneer-seller design an auction to reduce strategic underbidding and realize this true value?

 







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