c) Portsmouth Bank has foreclosed on a home mortgage and is selling the house at auction. There are three bidders for the house, Emily, Anna, and Olga. Portsmouth Bank does not know the willingness to pay of these three bidders for the house, but on the basis of its previous experience, the bank believes that each of these bidders has a probability of 1/3 of valuing it at £600,000, a probability of 1/3 of valuing at £500,000, and a probability of 1/3 of valuing it at £200,000. Portsmouth Bank believes that these probabilities are in de pendent among buyers. If Portsmouth Bank sells the house by means of a second- bidder, sealed- bid auction (Vickrey auction), what will be the bank's expected revenue from the sale?
c) Portsmouth Bank has foreclosed on a home mortgage and is selling the house at auction. There are three bidders for the house, Emily, Anna, and Olga. Portsmouth Bank does not know the willingness to pay of these three bidders for the house, but on the basis of its previous experience, the bank believes that each of these bidders has a probability of 1/3 of valuing it at £600,000, a probability of 1/3 of valuing at £500,000, and a probability of 1/3 of valuing it at £200,000. Portsmouth Bank believes that these probabilities are in de pendent among buyers. If Portsmouth Bank sells the house by means of a second- bidder, sealed- bid auction (Vickrey auction), what will be the bank's expected revenue from the sale?
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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