2. Consider a simultaneous-move auction in which two players simultaneously choose bids which must be in nonnegative integer multiples of one cent. The higher bidder wins a dollar bill. If the bids are equal, neither player receives the dollar. Each player must pay his/her own bid whether or not he or she wins the dollar. Each player's payoff is simply the net winnings. Construct a symmetric mixed-strategy equilibrium in which every bid less than 1.00 has a positive probability.

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Chapter2: Second-order Linear Odes
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2. Consider a simultaneous-move auction in which two players simultaneously choose bids which
must be in nonnegative integer multiples of one cent. The higher bidder wins a dollar bill. If the
bids are equal, neither player receives the dollar. Each player must pay his/her own bid whether
or not he or she wins the dollar. Each player's payoff is simply the net winnings. Construct a
symmetric mixed-strategy equilibrium in which every bid less than 1.00 has a positive probability.
Transcribed Image Text:2. Consider a simultaneous-move auction in which two players simultaneously choose bids which must be in nonnegative integer multiples of one cent. The higher bidder wins a dollar bill. If the bids are equal, neither player receives the dollar. Each player must pay his/her own bid whether or not he or she wins the dollar. Each player's payoff is simply the net winnings. Construct a symmetric mixed-strategy equilibrium in which every bid less than 1.00 has a positive probability.
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