Consider a bilateral trade model with two-sided asymmetric information. The buyer's value is private information to the buyer, vB and the seller's value vs is private information to the seller. (a)Derive the linear Bayes Nash Equilibrium in a double auction. (b)Assume that the seller can credibly disclose their valuae. What is your intuition, would he want to commit to such transparency?
Consider a bilateral trade model with two-sided asymmetric information. The buyer's value is private information to the buyer, vB and the seller's value vs is private information to the seller. (a)Derive the linear Bayes Nash Equilibrium in a double auction. (b)Assume that the seller can credibly disclose their valuae. What is your intuition, would he want to commit to such transparency?
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.7P
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TRADE. Consider a bilateral trade model with two-sided asymmetric information. The buyer's value is private information to the buyer, vB and the seller's value vs is private information to the seller.
(a)Derive the linear Bayes Nash Equilibrium in a double auction.
(b)Assume that the seller can credibly disclose their valuae. What is your intuition, would he want to commit to such transparency?
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