Question: Explain clearly.. (10p) Question 1: Below is the TWO PERIOD MONOPOLY game we studied in class: YOU have 100 laptops to sell in two periods.

Explain clearly..

Explain clearly.. (10p) Question 1: Below is the TWO PERIOD MONOPOLY game

(10p) Question 1: Below is the TWO PERIOD MONOPOLY game we studied in class: YOU have 100 laptops to sell in two periods. There are 100 potential buyers B(1), ..., B(100). Buyer B(k) is willing to pay at most (100 -k) to buy a laptop in PERIOD 1. Let p(1) and p(2) be the price of a laptop in PERIOD 1 and PERIOD 2 respectively. The utility of B(k) is (100 - k - p(2)) if she buys in PERIOD 1, (1/2)(100 -k - p(2)) if she buys in PERIOD 2, and O if she does NOT buy. The best response of B(k) to (p(1), p(2)) is determined by which utility above is maximum. Question In a Nash Equilibrium of this game, YOU choose the strategy (p(1), p(2)) = (50, 50). For what reason, would YOU not choose (p(1), p(2)) = (50, 50)

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