# ps6 - Ec1052 Introduction to Game Theory Harvard University...

This preview shows pages 1–2. Sign up to view the full content.

Ec1052: Introduction to Game Theory Handout 14 Harvard University 18 April 2004 Problem Set 6 Due: Saturday, May 8 (Irit’s folder) Challenging problems are marked with one star. Double-starred questions do NOT count towards the grade. They are very hard and simply for the intellec- tually curious. Remember that you can work in groups but you have to write up your own solutions. Good luck! Problem 1. You have an opportunity to buy a painting during an auction. You believe that whatever the value of the picture, V, you can sell it with a 50% profit (i.e. you’ll get 1.5V). You do not know the value of the picture but you think it is anywhere between \$0 and \$1000. You assign a uniform distribution to V in this range. You have to bid. The trader will reject your offer if it is below V. 1(a) What is your optimal bid ? 1(b) How is this problem related to the Winner’s Curse ? Problem 2. Consider the game ’auctioning off a dollar’ which we played in the last class. The auctioneer offers a Dollar and n players can bid in an all-pay auction (you pay your bid).

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• 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.

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

• 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.

Dana University of Pennsylvania ‘17, Course Hero Intern

• 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.

Jill Tulane University ‘16, Course Hero Intern