Exercise 2.1. Amy and Bill simultaneously write a bid on a piece of paper. The bid can only be either $2 or $3. A referee then looks at the bids, announces the amount of the lowest bid (without revealing who submitted it) and invites Amy to pass or double her initial bid. If Amy's final bid and Bill's bid are equal then Bill gets the object (and pays his bid), otherwise Amy gets the object (and pays her bid). Represent this situation by means of two alternative extensive frames. Note: (1) when there is a simultaneous move we have a choice of which player we have as moving first: the important thing is that the second player does not know what the first plaver did: (2) when representing by means of information sets what a nlaver
Exercise 2.1. Amy and Bill simultaneously write a bid on a piece of paper. The bid can only be either $2 or $3. A referee then looks at the bids, announces the amount of the lowest bid (without revealing who submitted it) and invites Amy to pass or double her initial bid. If Amy's final bid and Bill's bid are equal then Bill gets the object (and pays his bid), otherwise Amy gets the object (and pays her bid). Represent this situation by means of two alternative extensive frames. Note: (1) when there is a simultaneous move we have a choice of which player we have as moving first: the important thing is that the second player does not know what the first plaver did: (2) when representing by means of information sets what a nlaver
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter13: Between Competition And Monopoly
Section: Chapter Questions
Problem 10DQ
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![Exercise 2.1. Amy and Bill simultaneously write a bid on a piece of paper. The bid
can only be either $2 or $3. A referee then looks at the bids, announces the amount
of the lowest bid (without revealing who submitted it) and invites Amy to pass or
double her initial bid. If Amy's final bid and Bill's bid are equal then Bill gets the
object (and pays his bid), otherwise Amy gets the object (and pays her bid).
Represent this situation by means of two alternative extensive frames. Note: (1)
when there is a simultaneous move we have a choice of which player we have as
moving first: the important thing is that the second player does not know what the
first player did; (2) when representing, by means of information sets, what a player
is uncertain about we typically assume that a player is smart enough to deduce
relevant information, even if that information is not explicitly given to her.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc89e7b70-ebb1-412b-bdaa-177e27d3633c%2F68fa237d-c272-4564-bc6d-bfd879b7fee5%2Fhyhitwa_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 2.1. Amy and Bill simultaneously write a bid on a piece of paper. The bid
can only be either $2 or $3. A referee then looks at the bids, announces the amount
of the lowest bid (without revealing who submitted it) and invites Amy to pass or
double her initial bid. If Amy's final bid and Bill's bid are equal then Bill gets the
object (and pays his bid), otherwise Amy gets the object (and pays her bid).
Represent this situation by means of two alternative extensive frames. Note: (1)
when there is a simultaneous move we have a choice of which player we have as
moving first: the important thing is that the second player does not know what the
first player did; (2) when representing, by means of information sets, what a player
is uncertain about we typically assume that a player is smart enough to deduce
relevant information, even if that information is not explicitly given to her.
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