3. James borrowed Zae's truck to drive up to Two Sustah's for a fish plate. When he pulled up in front of the place, the brakes gave out and James crashed into the storefront. James is suing Zae for not keeping his brakes maintained, and the Sustah's are suing both of the boys for the damage to their restaurant. This case illustrates and example of which kind of risk? (Circle all that apply.) a. Property risk b. Diversifiable risk c. Financial risk d. Liability risk
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- 36. Over the centuries several eminent thinkers have offered insights into the prob- lems of decision making in the face of risk. Which of the following lists places the the thinkers in correct chronological order, from earliest to latest? (a) Pierre Simon de Laplace, Daniel Bernoulli, John von Neumann, Christian Huygens, Amos Tversky (b) Daniel Bernoulli, Christian Huygens, Pierre Simon de Laplace, Amos Tversky, John von Neumann (c) Daniel Bernoulli, Pierre Simon de Laplace, Christian Huygens, Amos Tversky, John von Neumann (d) Christian Huygens, Daniel Bernoulli, Pierre Simon de Laplace, John von Neumann, Amos TverskyQuestion 1 Bob. Ann north Consider the following sequential-move game between Ann and Вов south visky ир down (2,6) Ann Nature left 50% (2,5) cold hot left 50% (3,10) right 50% (56) (3,4) (4,7) External uncertainty is handled by an outside player called "Nature". Nature chooses "Left" with probability 50%, "Right" with probability 50%. A. Use backward induction to find the rollback equilibrium. B. What are the rollback equilibrium payoffs? C. How many strategies does each player have? For each player, list all his/her strategies.First Player can invest $1.00 with Second Player. Second Player chooses whether tc cooperate and make the promised investment, or appropriate and keep First Player'a $1.00. Based on the payoff matrix shown below (first player payoffs on bottom left of cell, second player payoffa on upper right of cell), what will be First Player's payoff if contracis are not enforceable? Second Player Cooperate Appropriate Invest 1.5 1.0 First Player 1.5 -1.0 Don't Invest
- 3. Find the saddle point, if it exists, for the following game. (b) Solve the following game by using the principle of dominance and find the probabilities of strategies for each player and the value of the game. Player B Player A II III IV V 3 4 4 II 2 4 III 4 4 IV 4 4 20 2420 87602. Consider the following Bayesian game with two players. Both players move simultaneously and player 1 can choose either H or L, while player 2's options are G, M, and D. With probability 1/2 the payoffs are given by "Game 1" : GMD H 1,2 1,0 1,3 L 2,4 0,0 0,5 and with probability 1/2 the payoffs are according to "Game 2" : G |M|D H 1,2 1,3 1,0 L 2,4 0,5 0,0 (a) Find the Nash Equilibria when neither player knows which game is actually played. (b) Assume now that player 2 knows which one among the two games is actually being played. Check that the game has a unique Bayesian Nash Equilibrium.7. Suppose the only game in town involves flipping a fair coin (so Heads and Tails are equally likely), with a $x bet. If Heads comes up, the payoff is $0.9x; if Tails comes up, you lose the $x. You have $10,000, and must win at least $5,000 by tomorrow morning to pay off a debt to a mean dude. a. Compute the likelihood of winning at least $5000 by making a single bet of $10,000. b. Compute the likelihood of winning at least $1000 by playing the game 10,0000 times and betting a dollar each time. What is the likelihood of not losing money? Message learned?
- If a risk‐averse individual owns a home worth $100,000, and that individual iswilling to pay a maximum of $1,000 for an annual fire insurance policy that covers theentire loss in the event of a fire, then we know that:A. There is a one percent chance that the home will be destroyed by fire inthe next yearB. There is a greater than a one percent chance that the home will bedestroyed by fire in the next yearC. There is less than a one percent chance that the home will be destroyedby fire in the next yearD. None of the above is correct2- Who is risk aversion?4 Problem: Ticket Exchange Each of two players draw a lottery ticket with a random prize written on it. You can assume that prizes a uniformly drawn from an interval between 0 and 100 (can you solve it without uniform assumption?). Both player simultaneously decide whether to keep the prize or exchange the ticket with another player. If both decide to exchange, then the tickets are swapped and each player collects a prize from the newly acquired ticket. Find the BNE of the game. Hint: consider cut-off strategies, i.e. that prizes above some x are kept, and below z are offered for exchange.
- There are 2 players. They take Ston eS From the Pilt of 6 Stones. Player 1 can takt only 2 or 3 Stones. piayer 2 can taKeS only 2 or 4 StonesS. P layers take turns, observe dil Previous moves, and player 1 mover first. A pla yer loses if She can not make a legal move, While another player ir declared the Winner. Let the pay oF OF Winning egval to 1 and the payoFF OF losing equal to 0. a) represent the in ɛxtemsive Form (depict Only legalmoes) b) Find all SPNE OF this game& explain your a mwwer. Who Will Win ? game Only legalmar)i am not sure how to ask anther question after the expert answered one of mine but here is a question i asked the expert and the naswer he game me in picture 1 & 2. the questions insnt linked from other sites its from bartleby just coudlnt see option to ask anther. can you answer this part now: Now assume the financial advisor knows that another advisor will offer a competitive portfolio. Based on historical data, he knows this competitive portfolio’s total return follows a normal distribution with mean £36mil and standard deviation of £2mil and is priced at 5% of total return. Clients will naturally choose the advisor which offers the portfolio with the highest net How does the distribution of profit over the range of financial prices considered in part B) changes, when the competitor is considered?You and a coworker are assigned a team project on which your likelihood or a promotion will be decidedon. It is now the night before the project is due and neither has yet to start it. You both want toreceive a promotion next year, but you both also want to go to your company’s holiday party that night.Each of you wants to maximize his or her own happiness (likelihood of a promotion and mingling withyour colleagues “on the company’s dime”). If you both work, you deliver an outstanding presentation.If you both go to the party, your presentation is mediocre. If one parties and the other works, yourpresentation is above average. Partying increases happiness by 25 units. Working on the project addszero units to happiness. Happiness is also affected by your chance of a promotion, which is depends on howgood your project is. An outstanding presentation gives 40 units of happiness to each of you; an aboveaverage presentation gives 30 units of happiness; a mediocre presentation gives 10 units…