Some collector has a painting that he no longer values. However, there are two buyers that would be happy to acquire it. Buyer 1 assigns a value of $900 to the painting, and buyer 2 of $1,000. Explain that this situation can be represented as a cooperative game with transferable utility. Obtain the set of players and write down the characteristic function (supposing that the grand coalition’s value is $1000).Find the Core and the Shapley value of the game.

Game theory studies strategic interactions between rational decision-makers. It offers a framework…

Answered: Some collector has a painting that he…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Some collector has a painting that he no longer values. However, there are two buyers that would be happy to acquire it. Buyer 1 assigns a value of $900 to the painting, and buyer 2 of $1,000.

Explain that this situation can be represented as a cooperative game with transferable utility. Obtain the set of players and write down the characteristic function (supposing that the grand coalition’s value is $1000).
Find the Core and the Shapley value of the game.

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