93. (Project 2) Assume that a simulation of 5000 sample auctions with 19 companies and a standard
deviation of $17.35 million produced a Winner’s Curse of $29.52 million. If the standard deviation
increased, determine how this change would impact the value of the Winner’s Curse. You should
state whether the Winner’s Curse would increase, decrease, or stay the same and also provide a
correct explanation regarding why the Winner’s Curse would increase, decrease, or stay the same.
(A) The Winner’s Curse would increase since the maximum errors in the 5000 auctions would
increase due to a larger standard deviation.
(B) The Winner’s Curse would increase since the difference between the maximum errors and
second largest errors in the 5000 auctions would increase due to a larger standard deviation.
(C) The Winner’s Curse would decrease since a larger standard deviation would lower the
probability of winning the auction, so companies would want to subtract more to increase their
profit.
(D) The Winner’s Curse would stay the same since all the errors in the 5000 auctions would be
closer to zero due to a larger standard deviation.
(E) The Winner’s Curse would stay the same since the standard deviation has no effect on the
Winner’s Curse.
Bạn đang xem 93. - BUSINESS MATH 115B FINAL EXAM STUDY GUIDE