{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

asym_info_mkt_st - Overview Asymmetric Information and...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Overview: Asymmetric Information and Market Structure Bargaining Games Asymmetric Information (hidden attributes) The “Lemons” problem Adverse Selection • Solutions Bargaining Games : Introduction You will bargain over a car. Cars can be either good or bad. Half the cars currently owned by potential sellers are good and half are bad. A good car is worth $7000 to a seller (S), while a bad car is worth only $2000 to a seller. A potential buyer (B) always values the car $2000 more than the seller. A good car is thus worth $9000 to a buyer, while a bad car is worth $4000. The above facts are common knowledge among buyers and sellers. 1
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Bargaining Game I • Instructions – Bargaining on whether to sell and at what price (you may refuse to trade) – Record whether you reached an agreement if so, at what price how long it took to get agreement Bargaining Game II • Instructions Bargain on whether to sell and at what price (you may refuse to sell) You ARE allowed to make any claim about your actual value. (Remember though that everyone knows the distribution over possible values).
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern