asym_info_mkt_st

asym_info_mkt_st - Overview: Asymmetric Information and...

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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
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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). You are NOT allowed to give any personal assurances that your claims are true, such as promise a beer if you lie. Record
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This note was uploaded on 10/20/2011 for the course SLOAN 15.010 taught by Professor Berndt during the Fall '04 term at MIT.

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asym_info_mkt_st - Overview: Asymmetric Information and...

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