In a first-price sealed-bid auction, 10 bidders have independent private values v; uniformly distributed between 0 and 100. If the minimum increase is 1, a bidder should bid 10 45 50 O 51
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- The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a. A test market study of the potential demand for the product is expected to report either a favourable (F) or unfavourable (U) condition. The relevant conditional probabilities are as follows: P(F|S1)=0.10 P (U|S1)=0.90 P(F|S2)=0.40 P (U|S2)=0.60 P(F|S3)=0.60 P (U|S3)=0.40 A.Compute the probabilities by completing the table Sate of…The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a. A test market study of the potential demand for the product is expected to report either a favourable (F) or unfavourable (U) condition. The relevant conditional probabilities are as follows: P(F|S1)=0.10 P (U|S1)=0.90 P(F|S2)=0.40 P (U|S2)=0.60 P(F|S3)=0.60 P (U|S3)=0.40 What is the expected value of the market research information?…The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a. Use expected value to recommend a decision. b. Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand.
- In this extensive form game, if player B is a robot uses a mixed strategy where it picks L 50% of the time and R 50% of the time. If player A chooses the action that maximizes her expected payoff, the expected payoff will be 4 07 5.5 6.5 B kw (5/1) (1,9) (48) (7.10)Happy Company is going to introduce one of the three new products (alternative) to the market: A, B and C or Do Nothing. Each of the market conditions (favourable, stable or unfavourable) affects the payoff of the products. The company estimates the following payoffs, probabilities and EMVS: Decision Table with Conditional Values for Happy Company: Product Market Condition and Payoff (RM) Favourable Stable Unfavourable A 8,000 5,000 7,000 6,000 -5,000 -1,200 В 3,000 6,000 -1,000 Do Nothing Probability 0.4 0.3 0.3 Opportunity loss table for Happy Company.: MARKET CONDITION AND PAYOFF (RM) MAXIMUM IN PRODUCT FAVOURABLE STABLE UNFAVOURABLE A ROW (RM) A 5,000 5,000 3,000 3,000 3,000 1,000 8,000 0.4 1,200 C 1,000 1,000 Do Nothing Probability 6,000 0.3 8,000 0.3 Based on the above data answer the following questions: (a) Construct the expected opportunity loss table for Happy Sdn. Bhd.Global Gas International offers to contract the Halidurton Heavy Construction Corporation to build an oil pipeline from Canada to New Orleans that will provide Halidurton $500 million in income. The probability that the oil pipeline will leak, causing environmental damage is 0. If so, the legal liability will be $2,500 million. If Halidurton is risk neutral and liable for the damages from a leak, what is the 0 such that it is indifferent between accepting and rejecting the contract? Halidurton is indifferent between accepting and rejecting the contract if 0 equals rounded to the nearest whole number.) percent. (Enter your response
- A bunch of cookies should be divided among students by a teacher. Each student writes secretly on a sheet of paper his name and the amount of the cookies (his bid) he wants to get (other students cannot see this number). Then the teacher sorts these bids in ascending order and gives cookies to the students starting from the bid with the smallest amount. If cookies are finished at some point the rest of the students get nothing. If there are several equal bids that cannot be satisfied simultaneously with the current amount of cookies, cookies are equally divided among the students who named these bids. If there are extra cookies, the teacher keeps them. You should assume that cookies are perfectly divisible. Find a Nash Equilibrium in pure strategies. Explain why the set of strategies you propose is indeed a Nash Equilibrium in pure strategies. Explain why there are no other Nash equilibria.Please no written by hand A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $186 or $248, with both values equally probable. Without a reserve price, the second highest bid will be the price paid by the winning bidder. The following table lists the four possible combinations for bidder values. Each combination is equally likely to occur.The owner of a ski resort is considering installing a new ski lift that will cost $900,000. Expenses for operating andmaintaining the lift are estimated to be $1,500 per day when operating. The U.S. Weather Service estimates thatthere is a 60% probability of 80 days of skiing weather per year, a 30% probability of 100 days per year, and a 10% probability of 120 days per year. The operators of the resort estimate that during the first 80 days of adequate snow in a season, an average of 500 people will use the lift each day, at a fee of $10 each. If 20 additional days are available, the lift will be used by only 400 people per day during the extra period; and if 20 more days of skiing are available, only 300 people per day will use the lift during those days. The owners wish to recover any invested capital within five years and want at least a 25% per year rate of return before taxes. Based on a before-tax analysis, should the lift be installed?
- One investment option will give a guaranteed income of $100,000. An alternative option is risky - there is a 80%chance of earning $62,500 and 20% chance of earning $250,000. A risk-averse person will choose the guaranteed income of $100,000 over the risky option. True O FalsePlease no written by hand and no emage Suppose a company can select among two decisions (d1 and d2) and face three states of nature (s1, s2 and s3) with the following payoff table: Decision s1 s2 s3 d1 150 200 200 d2 50 200 500 The probabilities of s1, s2, and s3 are unknown. Using the optimistic approach, what is the optimal decision and what is the value of the payoff? Place the optimal decision in the first answer box and the maximum payoff used to arrive at this decision in the second.The first cost of a high-quality excavators is P203.4B or P203.8B depending on the size purchased. The situation presented is: O a. Continuous and Uncertain O b. Continuous and Risk O. Discrete and Certainty O d. Discrete and Risk