You are in the market for a used car At a used car lot, you know that the blue book value for the cars you are looking at is between $20,000 and $24,000 If you believe the dealer knows as much about the car as you, how much are you willing to pay Why Assume that you only care about the expected val...

You are willing to pay the average price If the distribut ...

You are in the market for a used car. At a used car lot, you know that

Question:

You are in the market for a used car. At a used car lot, you know that the blue book value for the cars you are looking at is between $20,000 and $24,000. If you believe the knows as much about the car as you, how much are you willing to pay? Why? Assume that you only care about the expected value of the car you buy and that the car values are symmetrically distributed.

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...