(a) Suppose the auction is conducted as follows. Price starts at 1 (at this price both bidders would be happy to win the project). The price goes down continuously: at time t = [0, 1], the price will be 1- t. At any time t, any bidder can shout "floccinaucinihilipilificious." Once that happens, the price will stop to decline. The bidder who remains silent becomes the winner and he is paid the price at that moment. If both players say it at the same time, the auction ends without a winner. If no player speaks until t = 1 (and the price will be zero by then), the game ends and a winner is selected randomly for a price of 0. Analyze this auction. You don't have to provide rigorous mathematical proofs. How does this auction relate to (a) or (b)? 1 (b) Suppose the auction is conducted as follows. Price starts at 0 (at this price neither bidder would be happy to win the project). The price goes up continuously: at time t€ [0, 1], the price will be t. At any time t, any bidder can say "supercal- ifragilisticexpialidocious." The first bidder to say it will be the winner and he is paid that prevailing price at that moment for the project. If both bidders say it at the same time, a winner is selected randomly. If no player says it until t = 1 (and the price will be 1 by then), the game ends and a winner is selected randomly for a price of 1. Analyze this auction. You don't have to provide rigorous mathematical proofs. How does this auction relate to (a) or (b)?
(a) Suppose the auction is conducted as follows. Price starts at 1 (at this price both bidders would be happy to win the project). The price goes down continuously: at time t = [0, 1], the price will be 1- t. At any time t, any bidder can shout "floccinaucinihilipilificious." Once that happens, the price will stop to decline. The bidder who remains silent becomes the winner and he is paid the price at that moment. If both players say it at the same time, the auction ends without a winner. If no player speaks until t = 1 (and the price will be zero by then), the game ends and a winner is selected randomly for a price of 0. Analyze this auction. You don't have to provide rigorous mathematical proofs. How does this auction relate to (a) or (b)? 1 (b) Suppose the auction is conducted as follows. Price starts at 0 (at this price neither bidder would be happy to win the project). The price goes up continuously: at time t€ [0, 1], the price will be t. At any time t, any bidder can say "supercal- ifragilisticexpialidocious." The first bidder to say it will be the winner and he is paid that prevailing price at that moment for the project. If both bidders say it at the same time, a winner is selected randomly. If no player says it until t = 1 (and the price will be 1 by then), the game ends and a winner is selected randomly for a price of 1. Analyze this auction. You don't have to provide rigorous mathematical proofs. How does this auction relate to (a) or (b)?
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.9P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning