Model situation as a bayesian game

Reference no: EM131252896

An exchange game:-

Each of two individuals receives a ticket on which there is an integer from 1 to m indicating the size of a prize she may receive. The individuals' tickets are assigned randomly and independently; the probability of an individual's receiving each possible number is positive.

Each individual is given the option to exchange her prize for the other individual's prize; the individuals are given this option simultaneously. If both individuals wish to exchange then the prizes are exchanged; otherwise each individual receives her own prize. Each individual's objective is to maximize her expected monetary payoff.

Model this situation as a Bayesian game and show that in any Nash equilibrium the highest prize that either individual is willing to exchange is the smallest possible prize.

Reference no: EM131252896

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