Part C: Bid Rigging Game Suppose we auction off a dollar bill among groups in the class. Bids are secret and legally binding. The highest bid wins the dollar. Profit for the winner = $l - bid. Non-winners earn zero profit. In the event of a tie, the profit is divided equally by the number of tied bidders. Non-winners receive no information about who won the bid or how the winner bid. 1) What should be the price of the dollar in a perfectly competitive market? 2) Suppose the bidders collude. What would be the collusion price of the dollar? 3) Pretend that your group faced these incentives. What price would you bid? Explain. 4) Now suppose that we are auctioning off a $100 bill. How does this affect the competitive price and collusive price that we expect? What price would you bid? Explain. 5) Suppose we are auctioning off a suitcase filled with $1 million cash. What would you bid? 6) Suppose that the identity and bid of the winner are made public information after the fact. Would that change your bid in parts c, d, or e? Explain. 7) Again suppose that the winner information is made public, but now there are only two individual bidders, you and your best friend. Would that change you bid in parts c, d, or e? Explain. 8) In a more general setting, would anyone ever bid more than something is objectively worth? Explain