Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 2P
To determine
Appropriate bid for a shoe when:
(a) There are five other bidders.
(b) There are ten other bidders.
To determine
Right time to bid very close to
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
10
Use the expected value information to illustrate how having more bidders in an oral auction will likely result in a higher winning bid.
Consider the following game:
Steffi
N
K
14, 6
7,6
8, 7
Jim
5, 8
8, 8
13, 6
M
1,5
8, -6
6, 6
What is Jim's best response to Steffi playing P? (you can select more than one answer)
V a. K
O b. M
O c. N
O d. L
V e. 14
O f. 8
A case study in the chapter describes a phoneconversation between the presidents of AmericanAirlines and Braniff Airways. Let’s analyze thegame between the two companies. Suppose thateach company can charge either a high price fortickets or a low price. If one company charges $300,it earns low profit if the other company also charges$300 and high profit if the other company charges$600. On the other hand, if the company charges $600,it earns very low profit if the other company charges$300 and medium profit if the other company alsocharges $600.a. Draw the payoff matrix for this game.b. What is the Nash equilibrium in this game?Explain.c. Is there an outcome that would be better than theNash equilibrium for both airlines? How could itbe achieved? Who would lose if it were achieved?
Chapter 17 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- L 0 4 15.1 X₂ A M R 0 1 4 0 2 B L 4 0 с X3 M R 0 1 3 FIGURE 15.5 Exercise 15.1. Equilibrium Selection: Consider the extensive-form game in Figure 15.5. a. Find all the Bayesian Nash equilibria of this game. b. Which of the Bayesian Nash equilibria are also perfect Bayesian equi- libria? Why?arrow_forwardSophia is a contestant on a game show and has selected the prize that lies behind door number 3.The show’s host tells her that there is a 50% chance that there is a $15,000 diamond ring behindthe door and a 50% chance that there is a goat behind the door (which is worth nothing to Sophia,who is allergic to goats). Before the door is opened, someone in the audience shouts, “I will giveyou the option of selling me what is behind the door for $8,000 if you will pay me $4,500 for thisoption.” [Assume that the game show allows this offer.]a. If Sophia cares only about the expected dollar values of various outcomes, will she buythis option?b. Explain why Sophia’s degree of risk aversion might affect her willingness to buy thisoptionarrow_forwardIn game theory, what is a subgame? What is a subgame-perfect Nash equilibrium? If possible, could you please provide an example? Thank you!arrow_forward
- prove that the following strategy profile is a Nash equilibrium:For any 0 < x ≤1, player 1 offers x to player 2, player 2 accepts any offer greater than orequal to x and rejects any offer smaller than x.Is this strategy profile a subgame perfect equilibrium as well? Briefly explain why.arrow_forwardQ3 Consider the following three-player normal form game (Player 3 is the page player): Player 3 A в Player 2 Player 2 A в A B 1,2, 3 в 2,3,1 Player 1 A Player 1 A 2, 1, 3 3, 2, 1 3, 2, 1 1,2, 3 в 1,3, 2 3, 1,2 For each player, strategies are A and B. a) Find the pure strategy Nash equilibrium of the above game. Assume now that the above game is played sequentially, with Player 3 moving first, Player 1 moving second, and Player 2 moving third. b) Write down the game tree. c) For each player, list all the available pure strategies. d) Find the subgame perfect equilibrium outcome and compare it with the equilibrium outcome you found in subquestion a). Comment.arrow_forwardSuppose there is a second price sealed bid auction in which the players have the following values: v1=15, v2=4, v3=6, v4=8, v5=10, v6=6. In the symmetric equilibrium, what bid will bidder 4 submit? a. 10 b. 15 c. 4 d. 8arrow_forward
- The payoff matrix below describes a one-shot game in which two farmers ("Player A" and "Player B") choose between planting corn or planting wheat. The payoffs in this matrix represent thousands of dollars of income, so more is better. Pla yer A Plant Corn Plant Wheat What kind of equilibrium is this? Plant Corn Dominant Strategy Equilibrium Nash equilibrium 3, 3 Player B 5,0 Both a Nash and a Dominant Strategy Equilibrium O No equilibrium Plant Wheat 0,5 1, 1arrow_forwardAssume that two people are bargaining over how to split the surplus of their joint efforts, which total $100. The only difference between the two is that player A has an associated interest rate of 5 percent and player B has an associated interest rate of 20 percent. Based on Nash bargaining theory, what share of the $100 ill Player A wind up with? (Please provide your answer in $ style format)arrow_forwardIn 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°Farrow_forward
- need a good explanation of this, Let G be an impartial game. Prove that G - G = 0 using only that for any game H, o(H) = P if and only if H = 0. important tips: read the instructions carefully and prove it is 0 by showing that second player is winner. o(G)=P iff G=0 use this statement to prove that G- G=0 that yoh can prove it zero by showing that second player is winarrow_forwardJagtar and Ravi both grow mangoes, which they sell in the same local market. They are deciding whether to pick 5 baskets worth of mangoes or 10 baskets, and have the following profit matrix: Jagtar 5 1 17 5 1 22 16 14 Ravi 1 24 14 a. What is the Nash equilibrium if both individuals make their decisions simultaneously? b. Does your analysis change if the local market charges a lump-sum fee of 12 to set up a stall and sell the mangoes in the space it provides? c. What would happen if the local market were instead to charge a lump-sum fee of 18?arrow_forwardWhich of the following DOES NOT accurately describe a Nash equilibrium? O It is the set of strategies which provides the players with the highest possible combined payoffs. All of these choices accurately describe a Nash equilibrium. O It is a set of strategies such that no player can receive a higher payoff by changing only their own strategy. It is a set of strategies such that no player, after seeing what the other players' strategies were, regrets their choice of strategy. It is a set of strategies such that every player, after seeing what the other players' strategies were, is satisfied (if not actually happy) with their choice of strategy.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
