Optimal bidding function

Assignment Help Macroeconomics
Reference no: EM13833880

Problem: Consider a first-price auction with three bidders, whose valuations are independently drawn from a uniform distribution on the interval (0, 30). Thus, for each player i and any fixed number y ∈ (0, 30), y/30 is the probability that player i's valuation vi is below y.

a. Suppose that player 2 is using the bidding function b2(v2) = (3/4)v2, and player 3 is using the bidding function b3(v3) = (4/5)v3. Determine player 1's optimal bidding function in response. Start by writing player 1's expected payoff as a function of player 1's valuation v1 and her bid b1.

b. Disregard the assumption made in part (a). Calculate the Bayesian Nash equilibrium of this auction game and report the equilibrium bidding functions.

Reference no: EM13833880

Questions Cloud

Cash to expand the firm’s truck fleet : The King Carpet Company has $3,000,000 in cash and a total of $12,000,000 in current assets. The firm’s current liabilities equal $6,000,000 such that the firm’s current ratio equals 2. The company’s managers want to reduce the firm’s cash holdings d..
What does home economics mean to you : What does home economics mean to you? When you hear the words "home economics", what do you think, by that I mean what image do you conjure up in your head
Discuss the various strategies of influence and persuasion : Discuss the various strategies of influence and persuasion that can be used to change people's beliefs and behaviours, using one of your own personal experiences as an example.
State the legal issue rule analysis of the rule to the facts : Claudia then disclaimed liability on the debt, asserting that she had not authorized her agent to enter into the loan agreement. Paul brought this action to collect on the loan. What is the decision? Please state the following: legal issue, legal rul..
Optimal bidding function : Problem: Consider a first-price auction with three bidders, whose valuations are independently drawn from a uniform distribution on the interval (0, 30). Thus, for each player i and any fixed number y ∈ (0, 30), y/30 is the probability that player..
Analyze a number of dga data from field transformers : In this assignment students will analyse a number of DGA data from field transformers. Different relevant standards and other internationally accepted methods can be used to predict incipient faults/conditions.
Please prepare an npv analysis of the rondo project : Please prepare an NPV analysis of the Rondo project. I have compiled the following cost and sales estimates from engineering and marketing. 1.Project life is 3 years. 2.Initial investment is $7,550,000 for equipment invoice, transportation, and insta..
Capital budgeting evaluation : Capital Budgeting Evaluation - 1.     How does a firm assess a new capital project? 2.     How would models of project evaluation such as NPV and IRR incorporate changes in economic outlook?
What can employers do in order to comply with the eeoc : What can employers do in order to comply with the EEOC requirements of reporting the race and sex of applicants? Collect the data after the hiring decision has been made. Gather the information on the application blank during the pre-screening proces..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Define a business cycle

Define a Business Cycle and describe what happens to Economic growth and Consumption at each stage of the cycle.

  How fast economy have to grow to bring unemployment down

Ben Bernanke has said that the Federal Reserve is going to continue its latest round of Quantitative Easing until unemployment falls to 6.5%. How fast will the economy have to grow to bring unemployment down to 6.5% by this time next year? Assum..

  Why the game has two pure strategy nash equilibria

(b) The game also has a mixed strategy Nash equilibrium. Find the equilibrium probability that each country will act tough as a function of k. (c) Does the equilibrium probability that a country will act tough rise, fall, or remain constant as k ri..

  Implications of us negotiated agreement

In 1981, the United State negotiated an contract with the Japanese. The contract called for Japanese auto companies to limit exports to the United State.

  What impact would that decline have on financial instruments

In the early 1980s, interest rates on long-term debt were at remarkable levels - above 15% with some even higher. Within a decade, rates had dropped precipitously. I have a couple of questions about that  What would the effect of a decline in inte..

  Explain why intermediate goods and services usually are not

Explain why intermediate goods and services usually are not included directly in GDP. Are there any circumstances under which they would be included directly?

  Discussion centers on how person or consumers

The discussion centers on how person or consumers would react during a period when a country's GDP growth rates.

  Optimal price level-marginal cost

Compute the point price elasticity of demand for bearing grease. Compute the optional price for bearing grease if marginal cost is $4.50 per unit.

  Industry price and output will approach the outcome for

Assume the firms in an oligopoly produce a differentiated product and are initially colluding. If each firm begins to cheat (to increase sales) by underpricing the other firms, as the amount of cheating increases, the resulting industry price and out..

  Elasticity of gdp per worker with respect to capital per

Elasticity of GDP per worker with respect to capital per worker = 0.25 Capital per worker grows at a rate of 4% per year. Technology advances at a rate of 5% per year.

  Prepare a proposal recommending monetary policy actions

prepare a proposal recommending monetary policy actions designed to correct problems with spending employment and

  Explain how has the introduction of females

Explain how has the introduction of females also minorities in the corporate structure impacted the supply of labor and the economy.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd