Question

In: Economics

Question An item is up for auction. Player 1 values the item at 3 while player...

Question An item is up for auction. Player 1 values the item at 3 while player 2 values the item at 5. Each player can bid either 0, 1, or 2. If player i bids more than player j then i wins the good and pays his bid, while the loser does not pay. If both players bid the same amount then a coin is tossed to determine who the winner is, and the winner gets the good and pays his bid while the loser pays nothing.

(a) Write down the game in matrix form.

(b) What will be the Nash equilibrium?

(c) What will be the equilibrium (SPNE) if player 1 bids first?

(d) What if player 2 goes first?

I got (1/2 , 3/2 ) for question b is that correct?

Can Someone help me with b, c and d ?

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Question 3 Jo and Jim are bidding in a second-price, independent, private value auction. Their values...
Question 3 Jo and Jim are bidding in a second-price, independent, private value auction. Their values for the object are independently and uniformly distributed on the interval (1,2). (1) What is the expected value of the winning bidder? (2) What is the expected value of the price?
An all-pay auction is a type of auction which allocates the good to the player with...
An all-pay auction is a type of auction which allocates the good to the player with the highest bid, and where all bidders pay their bid (even if they lose). Suppose that there are two bidders, with private valuations uniformly distributed on the interval 0 to 1. A bidder who wins the auction has a payoff of vi ? bi. A bidder who loses the auction has a payoff of ?bi. a. Suppose that player 2 pays the bidding strategy...
An all-pay auction is a type of auction which allocates the good to the player with...
An all-pay auction is a type of auction which allocates the good to the player with the highest bid, and where all bidders pay their bid (even if they lose). Suppose that there are two bidders, with private valuations uniformly distributed on the interval 0 to 1. A bidder who wins the auction has a payoff of vi ? bi. A bidder who loses the auction has a payoff of ?bi. a. Suppose that player 2 pays the bidding strategy...
Auction Auction Price Age of Item Number Bidders 1 $946 113 9 2 $1,336 126 10...
Auction Auction Price Age of Item Number Bidders 1 $946 113 9 2 $1,336 126 10 3 $744 115 7 4 $1,979 182 11 5 $1,522 150 9 6 $1,235 127 13 7 $1,483 159 9 8 $1,152 117 13 9 $1,545 175 8 10 $1,262 168 7 11 $845 127 7 12 $1,055 108 14 13 $1,253 132 10 14 $1,297 137 9 15 $1,147 137 8 16 $1,080 115 12 17 $1,550 182 8 18 $1,047 156 6...
Second price auction is quite similar to a first price auction(each player bids secrectly choosing a...
Second price auction is quite similar to a first price auction(each player bids secrectly choosing a nonnegative real number) and each player i value the object viwhere v1 > v2 > ....>vn > 0, except that the winner pays the amount of the second highest bid. Prove that for player i, bidding vi is a weakly dominant strategy. That is, prove that regardless of the actions of the other players, player i payoff when bidding vi is at least as...
Consider a second price auction with 2 bidders, 1 and 2, who have values for the...
Consider a second price auction with 2 bidders, 1 and 2, who have values for the good of 20 and 80, respectively. Each knows what the other bidder’s valuation is so there is no uncertainty. (a) Show that choosing a bid equal to one’s valuation is a weakly dominant strategy for bidder 1. (b) Show that if each bidder plays a weakly dominant strategy, the bidder with the highest value always wins the good (c) Is it a Nash equilibrium...
Question 3 Part a JKL Ltd bought an item of equipment at $4 million on 1...
Question 3 Part a JKL Ltd bought an item of equipment at $4 million on 1 January 2017, it had estimated life of 8 years and residual value at $800,000. The equipment was depreciated on straight line basis. However, the Inland Revenue Department does not allow depreciation as deductible expenses. Instead, tax expenses of this type of asset can be claimed against income tax in the year of purchase and 20% per annum (on reducing balance basis) of tax base...
Question 3 Part a JKL Ltd bought an item of equipment at $4 million on 1...
Question 3 Part a JKL Ltd bought an item of equipment at $4 million on 1 January 2017, it had estimated life of 8 years and residual value at $800,000. The equipment was depreciated on straight line basis. However, the Inland Revenue Department does not allow depreciation as deductible expenses. Instead, tax expenses of this type of asset can be claimed against income tax in the year of purchase and 20% per annum (on reducing balance basis) of tax base...
Jane wants to auction off an item, but does not know where to go to find...
Jane wants to auction off an item, but does not know where to go to find bidders. David offers to find bidders for her, but will charge her $10 per bidder he gets to show up. Each bidder will uniformly value the item between [500. 1000). The highest bidder will win the item and pay the second-highest bidder's price (Vickrey auction). How many bidders should Jane pay David to find?
Python Exercises = Sentinel Values and While Loops #Exercise 1 #Write a while loop with a...
Python Exercises = Sentinel Values and While Loops #Exercise 1 #Write a while loop with a sentinel value #This while loop ends when the user enters a 1, the sentinel value #Assign the number 8 to a variable which will serve as the sentinel value #Condition: while variable is not equal to 1 #Action: display the number assigned to the variable #Use an input statement (no prompt) to ask the user for a number and assign this number to the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT