Sam is in the market for a used motorbike. At a usedbike shop, Sam roughly knows that

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Sam is in the market for a used motorbike. At a usedbike shop, Sam roughly knows that the price of a used-motorbike is between $40,000 and $48,000. If Sam believes that the dealer knows as much about the bikes as him, how much do you think Sam is willing to pay? Explain. Assume that he only cares about the expected value of the bike he buys and that the bike values are symmetrically distributed.

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Financial Markets And Institutions

ISBN: 9781292215006

9th Global Edition

Authors: Stanley Eakins Frederic Mishkin

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