HO2-PS1 - MS&E 352 Handout #2 Decision Analysis II January...

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MS&E 352 Handout #2 Decision Analysis II January 8 th , 2009 ________________________________________________________________________ ________________________________________________________________________ 01/08/09 1 of 3 Problem Set #1 Problem Set #1 Due Thursday, January 22 nd , 2009 Note: (*) indicates more challenging questions. Problem 1 – Sealed Bid auction [25 points] Ed considers placing a sealed bid in an on-line auction for a rare baseball card. The graphs below represent Ed’s beliefs about this auction. Ed is risk neutral over the range of values below. Prospect of Acquiring card | Bid = x -15 -10 -5 0 5 10 15 20 25 0 5 10 15 20 25 30 Bid ($) Value ($) {Aquire Card | Bid = x, &} 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0 5 10 15 20 25 30 Bid ($) {Aquire Card | Bid, &}
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MS&E 352 Handout #2 Decision Analysis II January 8 th , 2009 ________________________________________________________________________ ________________________________________________________________________ 01/08/09 2 of 3 Problem Set #1 a) [2 points] What is Ed’s PIBP for the card? Explain. b)
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This note was uploaded on 06/16/2010 for the course MS&E 352 taught by Professor Ronhoward during the Winter '09 term at Stanford.

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HO2-PS1 - MS&E 352 Handout #2 Decision Analysis II January...

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