What is a strategy for a player in this game

Assignment Help Business Economics

Reference no: EM131392043

Supposed players 1 and 2 are participating in a first-price sealed bid auction with private, independent valuations. Each player's valuation of the object to be sold, which is assumed to be worth 0 to the seller, is either 0 or 2 with equal probabilities. Each player knows her own valuation but only the probability distribution on the other player's valuation. Bids are restricted to be either 0, 1, or 2. Remember bids are chosen simultaneously, the highest bidder wins and pays the amount of his bid. If two bidders bid the same amount, one of them gets the object with probability 0.5

A) What is a strategy for a player in this game?

B) A bidder decides in advance of knowing his value to bid 0 if his value turns out to be 0 and 1 if his value turns out to be 2. If both bidders decide to behave in this fashion, would their strategies constitute a Nash Equilibrium?

Reference no: EM131392043

Questions Cloud

The first globalization debate : What exactly is up for debate in “The First Globalization Debate,” in which Goodwin explores competing ideas in Defoe’s Robinson Crusoe and Swift’s Gulliver’s Travels? Briefly explain the economic logic underlying arguments for a globally integrated ..

Money supply in response to adverse demand : Suppose that country A pegs its currency to that of country B. Now suppose that there is an adverse demand shock in country A. Country B is more likely to cooperate and increase its money supply in response to A's adverse demand shock when:

The average variable cost is constant : Suppose that John is the only TV seller in Madison. The average variable cost is constant at $20. There is no fixed cost. Suppose further that each consumer may buy up to one TV. Suppose that there are only rich people in Madison and there are 20 of ..

What is a strategy for a player in this game : Supposed players 1 and 2 are participating in a first-price sealed bid auction with private, independent valuations. Each player's valuation of the object to be sold, which is assumed to be worth 0 to the seller, is either 0 or 2 with equal probabili..

Monopolist practices first degree price discrimination : Suppose the monopolist cannot separate the two groups of buyers, but he can observe and charge the marginal utility of each unit of purchase as in the case of 1st degree price discrimination. How many units will the monopolist sell to the two groups ..

When a single-price monopolist maximizes profits : When a single-price monopolist maximizes profits, price is greater than marginal cost. This means that buyers would be willing to pay more for additional units of output than the unit costs to produce. Given this, why doesn’t the monopolist produce m..

Major contemporary challenge to the international system : In your estimation, what is the major contemporary challenge to the international system at this point in time? Be sure to explain why this particular challenge is more substantive than all other challenges.

What are some explicit costs of going to school : What are some explicit costs of going to school? What are some implicit costs of going to school? How do you make the decision to go to school? What is judicial review and why is it such an important power? Examine one instance of judicial review hav..

User Account

All Pages