Consider the following simple model of a common values auction. Two buyers each obtain a private signal about the value of an object. The signal can be either high (H) or low (L) with equal probability. If both obtain signal H, the object is worth 1; otherwise, it is worth 0. Suppose the buyer sees a signal of L, the expected value of the object to the buyer is the buyer sees a signal of H. the expected value of the object to the buyer is . Suppose (NOTE: Write your

Consider the following simple model of a common values auction. Two buyers each obtain a private signal about the value of an object. The signal can be either high (H) or low (L) with equal probability. If both obtain signal H, the object is worth 1; otherwise, it is worth 0. Suppose the buyer sees a signal of L, the expected value of the object to the buyer is the buyer sees a signal of H. the expected value of the object to the buyer is . Suppose (NOTE: Write your

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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