i, the valuation of the object is uniformly distributed on [0,1]. The valuations of the two bidders are independent. Each bidder knows her own valuation, but not the valuation of the other bidder. The bidders simultaneously submit bids b € [0, ∞), and whoever submits the higher bid wins the object and pays the average of the two bids. In case of a tie, each bidder wins the object with probability 1/2 and again the winner pays the average of the two bids. Find a Nash equilibrium of this game in which each bidder's strategy is linear in her valuation. Solution: Look for a symmetric equilibrium where each player bids according to b(v) = av+c. First note that in equilibrium, b(0) = 0 since otherwise types with valuations just above 0 win with positive probability and pay more than their valuation, and hence would prefer to lower their bids. Hence e=0. For every valuation vi for player 1, v₁ = must solve max Pr(b₂ < b(v')) (v₁ − 1 (b(v¹) + E [b(v₂) | v2 < v′])) . de[0,1] We have Pr(b₂ < b(v')) = Pr(v₂ < v') = v'. Moreover, since b(v₂) is linear and b(0) = 0, E [b(v₂) | v¹₂ < v′] = b(v¹)/2. Substituting and differentiating leads to the first-order condition - ²b(v) - vb¹(v) = 0, which is solved for all v if a = 2/3. There is a symmetric NE in which both players use the strategy b(v) = 2v/3.

Write a sentence or two defining the following terms in your own words. Give examples of each.     j. Dishonest workers               k. Elastic Demand               l. Entrepreneurship

Alana wishes to obtain auto insurance. She wants 100/300/100 liability coverage, $250 deductible collision and full coverage comprehensive. She lives in territory 2 and has been assigned to driver class 2 with a rating factor of 1.25. Based on Table 19-6 and Table 19-7, what would be her total premium, if her three-year-old car were in model class L? (Round your answer to the nearest cent.) a. $355.00 b. $365.00    c. $456.25 d. $465.38

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The opportunity cost of working is __ Select one: a. the wage you earn for the time spent working. b. too high to even consider not working. c. what you can buy because you worked. d. what you would have done during the time if you were not working.

What are the environment in which business operates?