What is the victim optimal offer

Assignment Help Other Subject

Reference no: EM132291744

Assignment - Bargaining with Uncertainty about Value

Suppose a hacker has captured a victim's data. He does not know how valuable his data are to identity fraud criminals. With probability q, he believes it to be worth V > 0; with probability 1-q, he believes it to be worth V¹> V. The hacker, however, knows how much the data are worth.

The victim makes an offer to "buy" the data back. Specifically:

He offers x ≥ 0.

If the hacker accepts, the victim earns -x and the hacker earns x.

If he rejects, the payoffs depend on the value of the data.

If the data were valuable (with probability 1-q), the victim earns -V¹, and the hacker earns V¹-c, where c > 0 represents the transaction cost the hacker has to pay to find a buyer for the identity information.

If the data were not valuable (with probability q), these payoffs are -V and V -c instead.

a. What is the victim's optimal offer? You may assume that the hacker accepts when indifferent. Your answer should be in terms of V, V¹, c, and q.

b. What is the "price of uncertainty" in this game? (Calculate the victim's expected value of the game. Then subtract that amount from the victim's expected value for the game in which he knows the value of the data.)

c. How does the probability of a deal being reached change as c increases?

d. How does the probability of a deal being reached change as V increases?

Reference no: EM132291744

Questions Cloud

How professionals can use the psychological theory : As a human service professional, you and other members of your professional team are in positions of authority. Utilize a psychological theory to explain.

Low prices cure low prices and high prices cure high prices : Discuss the following statement: “Low prices cure low prices and high prices cure high prices.”

Describe some key challenges that multicultural teams face : Globalisation has made multicultural teams the norm in many multinational organisations. Please (a) describe some key challenges that multicultural teams face

Why was the case tried in civil court : Explain where (local, state, or federal court) the case was tried, specifically including whether the case was tried in civil court as well as criminal court.

What is the victim optimal offer : What is the victim's optimal offer? You may assume that the hacker accepts when indifferent. Your answer should be in terms of V, V1, c, and q

How best to manage people in their particular context : Presently, each organization must find its own unique solution to the problem of how best to manage people in their particular context.

Address the communication issue from the scenario : ENG 315 Professional Communications – Strayer University - Write a Block Business Letter from the perspective of company management

Describe what organisations can do to avoid bamboo ceiling : Bamboo ceiling is a pressing concern in many western organisations. Please (a) explain what "Bamboo Ceiling" is, (b) outline the possible reasons for bamboo

Corporation structure and culture be internal strengths : In what ways can a corporation’s structure and culture be internal strengths or weaknesses? Strategic Management

User Account

All Pages