Explain why the dominant strategy equilibrium in an open outcry English auction is also the Nash equilibrium
What will be an ideal response?
The dominant strategy equilibrium in an open outcry English auction occurs if each bidder bids up to his or her maximum willingness to pay for the item being auctioned. This is because a bidder is always better off by continuing to bid until price exceeds his or her willingness to pay irrespective of the bids placed by the other bidders. This equilibrium is also the Nash equilibrium because it is the best strategy that each bidder can use given the strategies of the other bidders.
You might also like to view...
The difference between gross and net investment is referred to as:
a. a personal tax. b. the income earned but not received. c. a capital consumption allowance. d. an indirect business tax. e. a statistical discrepancy.
The economy is in long-run equilibrium only when the short run aggregate supply curve intersects the aggregate demand curve along the long run aggregate supply curve
a. True b. False Indicate whether the statement is true or false
Firms are willing to change the aggregate quantity of output supplied based on price in:
A. both the short and long run. B. the short run only. C. the long run only. D. Price does not affect the quantity that firms supply.
The government can continuously issue new bonds to pay the interest on its outstanding bonds so long as
A) the real GDP growth rate exceeds the real interest rate. B) the real interest rate exceeds the real GDP growth rate. C) the real interest rate exceeds the nominal interest rate. D) the nominal interest rate exceeds the cost of borrowing.