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Consider the following situation: five individuals are participating in an auction for an old bicycle used by a famous cyclist. The table below provides the bidders' valuations of the cycle. The auctioneer starts the bid at an offer price far above the bidders' values and lowers the price in increments until one of the bidders accepts the offer.   Bidder Value ($) Roberto 750 Claudia 700 Mario 650 Bradley 600 Michelle 550   What is the optimal strategy of each player in this case? Who will win the auction if each bidder places his or her optimal bid? If Claudia wins the auction, how much surplus will she earn?

Note: The answer should be typed.

You are bidding in a second-price auction for a painting that you value at $800. You estimate that other bidders are most likely to value the painting at between $200 and $600. Which of these is likely to be your best bid? ‍$1,000 ‍$800 ‍$600 ‍$400

Discrete All-Pay Auction: In Section 6.1.4 we introduced a version of an all- pay auction that worked as follows: Each bidder submits a bid. The highest bidder gets the good, but all bidders pay their bids. Consider an auction in which 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 both pay. If both players bid the same amount then a coin is tossed to determine who gets the good, but again both pay. a. Write down the game in matrix form. Which strategies survive IESDS? b. Find the Nash equilibria for this game.

Poker players are known to bluff once in a while, meaning that they will make a large bet despite holding inferior cards in an effort to pressure other players to fold their hands. Would bluffing be considered a dominant strategy in poker? a) No, because if a player bluffs on every hand, other players will catch on and call his or her bluff. b) No, because bluffing is usually not successful and is therefore considered a secondary strategy. c) Yes, because it usually results in a winning hand. d) Yes, because it is the main strategy used by players.

Consider a Common Value auction with two bidders who both receive a signal X that is uniformly distributed between 0 and 1. The (common) value V of the good the players are bidding for is the average of the two signals, i.e. V = (X1+X2)/2.  the symmetric Nash equilibrium bidding strategy for the second-price sealed-bid auction assuming that players are risk-neutral and have standard selfish preferences. Furthermore, you may assume that the other bidder is following a linear bidding strategy. Make sure to explain your notation and the steps you take to derive the result.

How to solve this question? 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 Dutch auction?

a Firm A and Firm B decide to launch their new products in the market. Each firm can choose to either sell the product at a high price (H) or a low price (L). The estimated payoff table is as follows:   Firm B   L   H   Firm A   L   (250, 150)   (280, 130)   H   (140, 180)   (270, 190)   (Firm A's payoff is given before the comma, and Firm B's payoff is given after the comma.)   i What are the dominant strategies (if any) for Firm A and Firm B respectively?   ii What is the Nash equilibrium outcome, if any? Explain. (   iii If Firm A can decide on what strategy to use first, what will be the Nash equilibrium (if any) of this sequential game? Explain with the aid of a tree diagram.   b Explain why the market of health insurance is less efficient with the presence of asymmetric information. (Assume the insured knows more about his/her health condition than the insurance provider.)

It is commonly observed that cigarette companies advertise too much. This can be explained by the fact that they: Multiple Choice are pursuing a tit-for-tat strategy and are engaged in destructive behavior. seek to convince customers to switch brands and they have a dominant strategy to advertise in this case. do not know what the payoff options are. make the most money collectively if they advertise and increase the total market.

There are two sellers who compete by choosing quantity (Cournot). The inverse demand is P = 120 − Q. Each firm’s cost is 30Q.  There are no fixed costs. In this market, firms decide how much to produce, and then the price is determined by the market (think of fishing boats, for example). Suppose that Firm 2 produces 30. Then the inverse demand facing Firm 1 is P = 120 − 30 − Q1 = 90 − Q1. This implies that Firm 1’s marginal revenue is 90 −2Q1. How much will Firm 1 produce to maximize its profits? Suppose that Firm 1 produces 30. Then the inverse demand facing Firm 2 is P = 120 − 30 − Q2 = 90 − Q2. This implies that Firm 2’s marginal revenue is 90 −2Q2. How much will Firm 2 produce to maximize its profits? If both firms produce 30, what are both firms’ profits? Suppose the buyers in this market proposed that the firms compete in a price game rather than a quantity game. For example, they might suggest that sellers compete in a price auction before production takes place. The winner…

Consider the following modified Cournot-game. Firm 2 is run by its owner whereas Firm 1 is run by a manager whose preferences are represented by the following payoff function u(9₁, 92) = II1₁ (91, 92) + aqı and the marked demand function is P = 1 – Q. The game is played as follows. In the first stage the owner of the Firm 1 chooses 0 < a < 1. Then the manager of Firm 1 and the owner of Firm 2 observes a and choose 9₁ and 92 to maximize u and II₂ respectively. What are the subgame-perfect equilibrium levels of a, 9₁ and 92?

Why it is unwise to bid less than your valuation of the good in a sealed bid second-price auction. In the first price sealed bid auction, a player gets a positive payoff by doing bid shading. Explain the tradeoff between biding lower than the value of the object and biding very close to value of the object.

A Nash Equilibrium is the equilibrium of a game in which;   Both players get the largest payoff amount Both players get the best payoff independent of what the other players choices are Both player, with the knowledge of what the other players possible moves are, do not have incentive to deviate from their strategy There is incomplete information of the game and each player makes the move that is best for them and their payoff outcome

Explain how the strategic choice of reservation price can raise expected profitability yet threaten efficiency in an English auction.

please  if you can teach explain

Management and a labor union are bargaining over how much of a $50 surplus to give to the union. The $50 is divisible up to one cent. The players have one shot to reach an agreement. Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer. Both players get zero if the total amounts asked for exceed $50. Which of the following is a Nash equilibrium? Management requests $25 and the labor union accepts $10. Management requests $35 and the labor union accepts $10. Management requests $20 and the labor union accepts $20. Management requests $50 and the labor union accepts $0.

the question is in the image attached

H6. Consider the GSP auction used by Google for selling its advertising slots. Suppose there are two slots and three bidders. The clicks received by slots 1 and 2 are 500 and 300, respectively. The three bidders 1,2, and 3 have values 10, 8, and 5 respectively for a click. As usual, we consider Symmetric Nash Equilibria (SNE). In particular, you need to focus on the SNE equilibrium bids that are optimal for Google. Write down the corresponding SNE bid submitted by bidder 2. Use the decimal representation, not the fraction.

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Consider a market with an incumbent firm, a potential entrant and a buyer with demand D(p) = 180 - p. Suppose the potential entrant is more efficient than the incumbent. The entrant has a unit production cost of $10 whereas the incumbent has a cost of $20 per unit. However, the entrant has to pay an entry cost of F = 500. Before entry, the incumbent can propose the buyer to sign an exclusive contract in exchange of a payment t to the buyer. An exclusive contract prevents the buyer to purchase from the entrant. The timing is as follows: 1. Incumbent offers buyer exclusive contract with payment t 2. B accepts or rejects 3. E decides to enter or not 4. active firms name price to B 5. B chooses supplier (respecting exclusive contract if in place) (a) Suppose no exclusive contract has been signed. Derive the equilibrium prices, profits and consumer surplus if (i) the entrant enters and (ii) the entrant does not enter. (b) Give the minimum amount the incumbent has to pay to induce the buyer…

Burger Doodle, the incumbent firm, wishes to set a limit price of $8 (rather than the profit-maximizing price of $12) to prevent Designer Burger from entering its profitable market. The game tree above shows the payoffs for various decisions. Burger Doodle makes its pricing decision, then Designer Burger decides whether to enter or stay out of the market. If Designer Burger chooses to enter the market, then Burger Doodle may or may not decide to accommodate Designer’s entry by changing its initial price to the Nash equilibrium price of $10. If Burger Doodle canNOT make a credible commitment to maintain its initial price should Designer Burger decide to enter the market, then Burger Doodle will set price equal to $________ at decision node 1 and the outcome _____________(is, is not) a Nash equilibrium.

“While auctions are appealing in theory, the challenges of auction design in practice are insurmountable” discuss