Suppose the players in Rubinstein's three-period bargaining game have the same discount factors: d for player 1 and player 2. At the beginning of the third period, player 1 receives a share s of the dollar, leaving 1 - s for player 2, where 0
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- If the market conditions for a given are specified by 60,000 -500p and Qs=500p,lf the government decide to set the price at 40 currency unit what policy is this?- Please interpret this set of assumptions. - At t=1, agent B owns the bond. What amount LB can agent B borrow from agent C in a repo trade at t=1 and what is the haircut?ABC Ltd., an Australian company, is expecting to export an equipment to China in December. The transaction will be settled in Chinese Yuan (CNY). Which of the following futures position between Chinese Yuan and Australian Dollar is appropriate for ABC Ltd. to hedge the foreign exchange risk? The company should short futures on the Chinese Yuan, O More than one of the other strategies is appropriate. The company should long futures on the Australian Dollar. None of the other strategies is appropriate. O The company should long futures on the Chinese Yuan.
- what is fisher effect theory and explian is it holds are not in short trem capital markets12.7 Trading Places: Two players, 1 and 2, each own a house. Each player i values his own house at v;. The value of player i's house to the other player, i.e., to player ji, is v₁. Each player i knows the value v; of his own house to himself, but not the value of the other player's house. The values v; are drawn independently from the interval [0, 1] with uniform distribution. a. Suppose players announce simultaneously whether they want to ex- change their houses. If both players agree to an exchange, the exchange takes place. Otherwise no exchange takes place. Find a Bayesian Nash equilibrium of this game in pure strategies in which each player i ac- cepts an exchange if and only if the value v; does not exceed some threshold 0;. b. How would your answer to (a) change if player j's valuation of player i's house were {v;? c. Try to explain why any Bayesian Nash equilibrium of the game de- scribed in (a) must involve threshold strategies of the type postulated in (a).Consider the following Bayesian game. There are two players 1 and 2. Both players choose whether to play A or B. Two states are possible, L and R. In the former, players play a stag-hunt game, and in the latter, players play a matching pennies game. Suppose that Player 2 knows the state, while Player 1 thinks that the state is L with probability q and R with probability 1 ! q. Payo§s in each state respectively satisfy: Player 1 is the row player, and their payo§ is the first to appear in each entry. Player 2 is thecolumn player and their payo§ is the second to appear in each entry. (a) What is the set of possible strategies for the two players in this game? (b) Find all the pure strategy Bayes Nash equilibria for any value of q 2 (0, 1).
- b)Rachel’s objective is to maximize the expected profit, subject to that Emma works for Racheland Emma puts effort. However, effort level is not observable. Hence, Rachel needs to writea contract based on the observables. Let’s say, Rachel pays Emma based on the outcome: xLwhen the profit is $0, xM when the profit is $2000, and xH when the profit is $3,000. ThenEmma has three options:(i) Not to work for Rachel(ii) Work for Rachel without effort(iii) Work for Rachel with effortFind Emma’s expected utility on each optionc)ssuming Rachel wants Emma to put effort, her objective essentially becomes to find thelowest contingent payment scheme that is just enough for Emma to work for Rachel, andgives an incentive for Emma to put effort. Formally, we can write this as:min 0.1xL + 0.3xM + 0.6xH ,subject to0.1√xL + 0.3√xM + 0.6√xH − 5 ≥ 15, (1)and0.1√xL + 0.3√xM + 0.6√xH − 5 ≥ 0.6√xL + 0.3√xM + 0.1√xH . (2)What is Constraint (1) called? What is Constraint (2) called?d) or your information, the…Consider the following bargaining problem: $20 dollars needs to be split between Jack and Jill. Jill gets to make an initial offer. Jack then gets to respond by either accepting Jill’s initial offer or offering a counter offer. Finally, Jill can respond by either accepting Jakes offer or making a final offer. If Jake does not accept Jill’s final offer both Jack and Jill get nothing. Jack discounts the future at 10% (i.e. future earnings are with 10% less than current earnings while Jill discounts the future at 20%. Calculate the Nash equilibrium of this bargaining problem. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Recognize the situation when both the parties in a barter economy have to agree to sell and buy each other's commodities ? What is it called ?
- Option strike prices are set by the exchange a. True b. FalseSydney to Phoenix. Terry Lamoreaux owns homes in Sydney, Australia, and Phoenix, United States. He travels between the two cities at least twice a year. Because of his frequent trips, he wants to buy some new high-quality luggage. He has done his research and has decided to purchase a Briggs and Riley three-piece luggage set. There are retail stores in Phoenix and Sydney. Terry was a finance major and wants to use purchasing power parity to determine if he is paying the same price regardless of where he makes his purchase. If the price of the three-piece luggage set in Phoenix is $850 and the price of the same three-piece set in Sydney is A$930, using purchasing power parity, is the price of the luggage truly equal if the spot rate is A$1.0941/$?In Figure 1, if in the status quo we are at point A, which point(s) would pass the Kaldor-Hicks compensation principle? In Figure 1, if in the status quo we are at point A, a movement to which point(s) would pass a unanimous vote? In Figure 1, if in the status quo we are at point A, describe what kind of side payment would be required to move to point D and cause neither Benny nor Gary to be made worse off?