What amount does each bidder bid in the Bayesian Nash equilibrium of a 2nd price auction? The expected value of the second highest bidder. One half of the expected value of the second highest bidder. Their own value. One half of their own value.
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- 10 Use the expected value information to illustrate how having more bidders in an oral auction will likely result in a higher winning bid.Generally speaking the demand for a good will be more inelastic O if the good is very specific and narrowly defined. O the greater the time period being considered. O if the good is a luxury. O if the good makes up a small part of an individual's budget. 21 ttv MacBook Pro F8 F9 F7 D00 F4 F6 F5 F3The above table shows the payoffs that either Darrin or Rob receive depending on whether they choose a high or a low price strategy. The predicted outcome is A. Darrin - Low Price; Rob - Low Price. B. Darrin - Low Price; Rob - High Price. C. Darrin - High Price; Rob - Low Price. D. Darrin - High Price; Rob - High Price.
- A cool kid is willing to rename himself for a profit. He decides to auctionoff the naming right. Two bidders show interest. Their valuations for thenaming right are independently and uniformly distributed over [0,100].There are several possible ideas to design the auction. The auction runs as follows. Both bidders are invited to the same room; an auctioneer will start the auction with an initial price 0, and increase it by $1 every minute. The bidders are not allowed to say anything during the process, but they can walk out of the room at any moment. If one bidder walks out of the room when the price increases to p (the bidder does not need to pay), the remaining bidder will be awarded the naming right for a price of p. If both walk out when the price reaches p, the naming right is not assigned andthe two bidders do not need to pay. What should the bidders do? Explain your answer.You like your job, but your boss gives lousy bonuses. You were recently offered a new job with better rewards and your friend wants to know if you intend to take it. You say, "It depends on whether the bonus this year is generous, Let's wait and see. We'll find out next week" The likely outcome of this game is your boss gives you a ousy :bonus and you ept the new job. If you want to stay at your current job and be better rewarded, you could improve your strategy if you: demand an increase in your bonus by a certain amount, but does not tel your boss about the job offer. adopt a dominant strategy to accept the other position and make this known to your boss. O tell the boss about the job offer you are prepared to take if your bonus structure does not increase by a certain amount. Cadopt a dominant strategy to stay at your current position and make this known to your boss.Exercise 6.8. Consider the following extensive-form game with cardinal payoffs: 1 R O player pay 000 2 1 M 3 b 010 O player 3's payoff 1 2 221 2 000 0 0 (a) Find all the pure-strategy Nash equilibria. Which ones are also subgame perfect? (b) [This is a more challenging question] Prove that there is no mixed-strategy Nash equilibrium where Player 1 plays Mwith probability strictly between 0 and 1.
- A cool kid is willing to rename himself for a profit. He decides to auctionoff the naming right. Two bidders show interest. Their valuations for thenaming right are independently and uniformly distributed over [0,100].There are several possible ideas to design the auction. a) The auction runs as follows. Both bidders are invited to the sameroom; an auctioneer will start the auction with an initial price 0, and increase it by $1 every minute. The bidders are not allowed to say anything during the process, but they can walk out of the room at any moment. If one bidder walks out of the room when the price increases to p (the bidder does not need to pay), the remaining bidder will be awarded the naming right for a price of p. If both walk out when the price reaches p, the naming right is not assigned and the two bidders do not need to pay. What should the bidders do? Explain your answer. (b) Both bidders are invited to submit their bids covertly (bids are non-negative real numbers).…Say that you are bidding in a sealed-bid auction and that you really want the item being auctioned. Winning it would be worth $500 to you. Say you expect the next-highest bidder to bid $300.a. In a standard “highest-bid” auction, what bid would a rational person make? The rational choice is to bid $500 since that is what the item is worth to you. The rational choice is to bid a little bit more than $300 because that is the expected next-highest bid. The rational choice is to bid just under $500 so that you have a higher chance of winning the auction and would still have a net benefit. The rational choice is to bid over $500 to guarantee that you win the item. b. In a Vickrey auction, what bid would he make? The rational choice is to bid slightly more than $500. The rational choice is to bid $500. The rational choice is to bid slightly less than $500. The rational choice is to bid slightly more than $300.A principal can choose to make the allocation of tasks broad (B) or narrrow (N). At the same time an agent can choose to work put in high effort (H) or low effort (L). The payoffs are 20 to the principal and 30 to the agent is the actions chosen are B and L. For all other combinations of actions the payoffs are 0 to both players. Which of the following statements are true? DA Nash equilibrium of the game is (B, H) A Nash equilibrium is (N, L) There is no Nash equilibrium in pure strategies in this game. A Nash equilibrium is (N, H) A Nash equilibrium is (B, L)
- In game theory, a dominant strategy is the best strategy to pick, no matter which moves are chosen by the other player. O to make the exact same move that was made by the other player. the choice that causes the payoff for the other player to be minimized, regardless of the payoff it earns the best strategy to pick, assuming the other player makes his or her best possible choice. to allocate all personnel resources towards defensive talent in order to dominate opposing offenses. 46°F10. Game theorySuppose that the University of Alabama and Clemson are making spending decisions for theupcoming year. Assume that Alabama is currently spending $15 million on their recruiting andfacilities, and Clemson is spending $10 million. Each team has an additional $5 million to spendor keep as profits. If they both choose to not spend the additional $5 million then Alabama hasa 60% chance of getting the highest quality quarterback recruit to commit to them (getting thecommitment of the player is the goal). However, if they both choose to spend the additional $5million then there is a 57% chance that Alabama gets the high quality quarterback to commit. IfAlabama spends the additional $5 million but Clemson doesn’t then there is a 67% chanceAlabama gets the recruit. However, if Alabama does NOT spend the additional $5million butClemson does then there is a 50% change either team gets the recruit’s commitment. Setup thepayoff matrix and label the players, their strategies, and their payoffs, and…