Problem Set 6 Solutions

Due: April 2, 2015 Economics 1030

Problem 1 (Buying a rm): Consider a generalized version of the buying

a rm problem:

```
The value, v, of company to Tomasz is distributed uniformly over the
range [v, v ]
Tomasz knows its true value.
You dont know true value but company is worth times more to you
than it is to Tomasz. (You should assume that 1.)
You make a take-it-or-leave-it oer to Tomasz, which Tomasz accepts
if and only if your oer is greater than or equal to his valuation.
You are risk neutral.
```

a. Assume that [v, v ] [0, 100]. Derive the function that maps to the

```
optimal level of your bid. In other...
```

ECON1030 Spring

Ash

**Excerpt from file: **Problem Set 6 Solutions Due: April 2, 2015 Economics 1030 Problem 1 (Buying a firm): Consider a generalized version of the buying a firm problem: The value, v, of company to Tomasz is distributed uniformly over the range [v, v] Tomasz knows its true value. You dont know true value but company is

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