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Question
Submitted by jjakda on Mon, 2012-04-30 02:44
due on Mon, 2012-04-30 02:42
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ECON

A selfless person approaches Jones and Smith with a $100 bill and offers to sell it to the highest bidder, but both the winning and losing bidders must pay her their bids. So if Jones bids $2 and Smith bids $1 they pay a total of $3, but Jones gets the money, leaving him with a net gain of $98 and Smith win -$1. If both bid the same amount, the $100 is split evenly between them. Assume that each of them has only two $1 bills on hand, leaving three possible bids: $0, $1, or $2. Write out the payoff matrix for this game, and then find its Nash equilibrium.

Answer
Submitted by ANANDH on Mon, 2012-04-30 14:34
teacher rated 54 times
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ECONOMICS _ A+ answer

body preview (145 words)

x selfless person xxxxxxxxxx xxxxx xxx xxxxx xxxx a $100 bill xxx xxxxxx xx sell it to xxx xxxxxxx xxxxxxx xxx both xxx winning and losing xxxxxxx must xxx xxx their xxxxx So xx xxxxx bids $2 xxx xxxxx bids xx they pay x total xx $3, xxx Jones xxxx the money, leaving xxx xxxx a net gain of $98 and xxxxx win -$1. xx xxxx bid the same amount, the xxxx is xxxxx xxxxxx between them. xxxxxx xxxx xxxx xx them xxx xxxx two $1 xxxxx xx hand, leaving xxxxx possible bids: xxx xxx xx xxx Write xxx xxx payoff matrix xxx this game, and xxxx find xxx xxxx equilibrium.
xxxxxx matrix xx the game

xxxx Equilibrium
xxxx equilibrium xx xxx xxxxxxxxxx xxxx xxxxxxxx xxxx xxxxxxxx based xx its xxxxxxxxx xxxx xxxxxxxxx action. In xxx xxxxx case the xxxx equilibrium will be (98, xxx or both xxx xxxxxxx will bit $2.

file1.docx preview (148 words)

x selfless person approaches xxxxx xxx Smith with a $100 bill xxx offers xx xxxx xx xx xxx highest xxxxxxx but xxxx xxx winning and losing bidders xxxx pay her their xxxxx So if Jones bids $2 and Smith bids xx xxxx pay x total xx xxx xxx xxxxx gets xxx xxxxxx xxxxxxx xxx with x xxx gain xx $98 and xxxxx win xxxx If both xxx the xxxx amount, the $100 is split evenly between them. Assume that each xx xxxx has only xxx $1 bills on hand, leaving xxxxx xxxxxxxx xxxxx xxx $1, xx xxx Write xxx xxx xxxxxx matrix xxx xxxx xxxxx and then xxxx its Nash xxxxxxxxxxxx

xxxxxx matrix of the xxxx

Nash xxxxxxxxxxx

Nash equilibrium xx xxx player’x most xxxxxxxx xxxx strategy xxxxx xx xxx xxxxx’x xxxx favourite action. xx the above xxxx xxx Nash xxxxxxxxxxx xxxx be xxxx 98) xx both the xxxxxxx will bit $2.


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