Microeconomics Plus Mylab Economics With Pearson Etext -- Access Card Package (2nd Edition) (the Pearson Series In Finance)
2nd Edition
ISBN: 9780134641454
Author: Acemoglu
Publisher: PEARSON
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Chapter 17, Problem 3Q
To determine
Explanation of an English auction.
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why is a nash equilibrium stable
Hello, please help me to solve this question in Game Theory. Thanks in advance!Consider a first price sealed-bid auction of an object with two bidders. Each bidder i’s valuation of the object is vi, which is known to both bidders. The auction rules are that each player submits a bid in a sealed envelope. The envelopes are then opened, and the bidder who has submitted the highest bid gets the object and pays the auctioneer the amount of his bid. If the bidders submit the same bid, each gets the object with probability 0.5. Bids must be integers.
Find a Nash equilibrium for this game and show whether it is unique.
Use the expected value information to illustrate how having more bidders in an oral auction will likely result in a higher winning bid.
Chapter 17 Solutions
Microeconomics Plus Mylab Economics With Pearson Etext -- Access Card Package (2nd Edition) (the Pearson Series In Finance)
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- Define game theory.arrow_forwardwould it be -3? if not, how do i find it? game theoryarrow_forwardHow 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?arrow_forward
- PJ has been owning a City Golf, model 2004 for the past 15 years and now plans to sell it. Town auctioneers has offered to sell his car at their next auction. This is the first time PJ is hearing at an auction. PJ has approached you to explain to him what auction means and asked you if he should sell his car on auction or not. Briefly explain to PJarrow_forwardJane is interested in buying a car from a used car dealer. Her maximum willingness to pay for thecar is 12 ($12,000). Bo, the dealer, is willing to sell the car as long as he receives at least 9($9,000). What is the Nash bargaining solution to this game?arrow_forwardSuppose there is a second price sealed bid auction in which the players have the following values: v1=15, v2=4, v3=6, v4=8, v5=10, v6=6. In the symmetric equilibrium, what bid will bidder 4 submit? a. 10 b. 15 c. 4 d. 8arrow_forward
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