Reference no: EM131253534
Suppose we modify problem 6 in two ways. First suppose that the firms have costs of 1, 2, or 3, with each level of cost equally likely, and with the cost levels of the two firms independent of one another. (Each firm knows its own cost but not the costs of its rival.) Suppose the government solicits bids from the firms. If they bid the same amount, the order is spliti if one firm bids less, it is given the entire order. And (the second change) a firm is paid not what it bid but what the other firm bid.
(a) If we construct from this mechanism the corresponding game of incomplete information, does this game have a pure strategy Nash equilibrium? Does it have more than one? If there is more than one, is there any reason to think that one equilibrium is more tenable than the others?
(b) For the equilibria you find in (a) construct the corresponding direct revelation games.
(This sort of auction, where the winning bidder is rewarded according to the bid made by the "second" best bid, is called a Vickrey auction. Almost any treatment of auction theory will tell you how to analyze this sort of auction, if you cant figure it out for yourself.)
Problem 6
Consider the toy problem of section 18.2. Imagine that the government institutes the following procedure: The two firms are asked to bid (simultaneously and independently) on the prices they will charge. They may not name a price greater than 4 or less than zero. (Of course, each knows its own unit cost when it does this.) If they name the same price, the order is split between them. If they name a different price, the order is given entirely to the firm naming the lower price. In both cases, the firm is paid per unit what it bids.
(a) If we construct from this mechanism the corresponding game (between the firms) of incomplete information, does the game have a pure strategy Nash equilibrium?
(b) If not, can you find a symmetric mixed strategy equilibrium?
(c) If you find any equilibrium, what is the corresponding direct revelation mechanism?
|
Large effect on the equilibrium quantity
: In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In which market will the tax have a smaller deadweight loss?
|
|
Develop concrete mechanism for verifying successful adoption
: More than that, you must develop a concrete mechanism for verifying the successful adoption of that vision. Even if you do not occupy a central leadership role, you can use the strategy you develop to help guide others in the field.
|
|
Develop three rules of thumb that individuals can use
: Develop three rules of thumb that individuals can use to select a career that is right for them. - Develop three rules individuals can use to identify a career that is not right for them.
|
|
Discuss services available to the older person in ireland
: The Learner is to complete a Project discussing the issues relating to the Care of the Older Person. Explore the needs of the care staff who work with Older People. Discuss services available to the Older Person in Ireland
|
|
What is the corresponding direct revelation mechanism
: If we construct from this mechanism the corresponding game of incomplete information, does this game have a pure strategy Nash equilibrium? Does it have more than one? If there is more than one, is there any reason to think that one equilibrium is..
|
|
What types of knowledge did repsol employees need to access
: What types of knowledge did Repsol employees need to access? - What sort of knowledge do people use in your chosen career field?
|
|
Problem regarding the future production possibilities
: Using the PPC as a springboard for your analysis, what effect would for going consumption today in order to "invest" for tomorrow have on future production possibilities? Now consider the choices our government faces when it has limited tax revenu..
|
|
Vision technologies automate urban inspections
: What other routine inspections do city, state, and national governments perform? How could vision technologies, combined with knowledge management systems, improve efficiency?
|
|
Find a symmetric mixed strategy equilibrium
: If we construct from this mechanism the corresponding game (between the firms) of incomplete information, does the game have a pure strategy Nash equilibrium?
|