2. (Adapted from Dixit and Nadcbuff, Thindang Stratogically.) Auric, a cocporate raider, is attempting to gain control of a major corporation, "Aglets RU8,1, be broying the stock from shareholders. Sujpose that before Auric audas hex twove, share poices are 8100 per share, Supponef further that there are 99 shares outstanding and that there are 9 a) sharreboldens, eveld with noe share. Aurie makas a tev-fierol bid for the shares, which I will describe in a moment. Eich sharcholder sleciufes independently and simultaneously whether to tender (wetl) their share to Auric. Sharcholders are thas engaged in a simultanoons toove gaane with payofts ax followa. REMARK. "Two-tiered" laere menes sousthisg differeat than in the two- If 50 shaves of fewer are tendered to loet, Aurie conamits to purchase the tendered shares for $MS each. If X> W0 shares are tendered, she commits to play a wrighted average of the first tier prioe of $105 abd a second tier price of 800, Specifically, she will pay jue tenuleted slaare: x50100+xx5090=90+x730 Note that Auric hays all tendered shares, ewa if Gewe than 50 are tendered (in which case Aurie fills to get control). If Auric dues get 50 of more shares, and sains control, then by law (this is in foct the case in the 1/S) she call buy the reanaining aluares at a "finir price," Assume that the recond tier price of 590 a state posses the legal akfintition of "fair jerice." Asoume alio that, given the ofportanity to bay these antendered sbarcs, Auric will in fact do mo. Finally, wasume that if Auric fails to get at lowe sil Ahares, then the stock bit obscexions but it mahos the equention simpher). (a) Sloow that it is a mtrietly dotainat strategy for roch shasehodider to teadit their Nuare. What, then is the ejuitibrium price per shure recerved by HINT. This gamae is too big for a game tuax, The good nowe is that shareholder i doesin't are exactly who, by anae, has tendered i care oely about how masy other jeophe have teadered. Thew atalyxis iuto cases. Suppose that 49 of fewer shareholderx, ocher thas i,, leave tendered. What is is bect respoase? Aud se ota. (b) Suppose that after Aurie has made bet propowal, but before ady shates have been tenulered, a -White Kuizght" conoes alung and says that he will purchwe shares for $162 a share prosided at least 50 shares are tendered to him. If fewer than 50 shares are teadered, the deal is off. 1 Shareholders thus wust decide whether to tender to Auric, to the White Knight, of not. at all. Given the coenpeting ofer, is it still a strictly dominant strategy for each shasedvoliler to tender to Auric? 2. (Adapted from Dixit and Nadcbuff, Thindang Stratogically.) Auric, a cocporate raider, is attempting to gain control of a major corporation, "Aglets RU8,1, be broying the stock from shareholders. Sujpose that before Auric audas hex twove, share poices are 8100 per share, Supponef further that there are 99 shares outstanding and that there are 9 a) sharreboldens, eveld with noe share. Aurie makas a tev-fierol bid for the shares, which I will describe in a moment. Eich sharcholder sleciufes independently and simultaneously whether to tender (wetl) their share to Auric. Sharcholders are thas engaged in a simultanoons toove gaane with payofts ax followa. REMARK. "Two-tiered" laere menes sousthisg differeat than in the two- If 50 shaves of fewer are tendered to loet, Aurie conamits to purchase the tendered shares for $MS each. If X> W0 shares are tendered, she commits to play a wrighted average of the first tier prioe of $105 abd a second tier price of 800, Specifically, she will pay jue tenuleted slaare: x50100+xx5090=90+x730 Note that Auric hays all tendered shares, ewa if Gewe than 50 are tendered (in which case Aurie fills to get control). If Auric dues get 50 of more shares, and sains control, then by law (this is in foct the case in the 1/S) she call buy the reanaining aluares at a "finir price," Assume that the recond tier price of 590 a state posses the legal akfintition of "fair jerice." Asoume alio that, given the ofportanity to bay these antendered sbarcs, Auric will in fact do mo. Finally, wasume that if Auric fails to get at lowe sil Ahares, then the stock bit obscexions but it mahos the equention simpher). (a) Sloow that it is a mtrietly dotainat strategy for roch shasehodider to teadit their Nuare. What, then is the ejuitibrium price per shure recerved by HINT. This gamae is too big for a game tuax, The good nowe is that shareholder i doesin't are exactly who, by anae, has tendered i care oely about how masy other jeophe have teadered. Thew atalyxis iuto cases. Suppose that 49 of fewer shareholderx, ocher thas i,, leave tendered. What is is bect respoase? Aud se ota. (b) Suppose that after Aurie has made bet propowal, but before ady shates have been tenulered, a -White Kuizght" conoes alung and says that he will purchwe shares for $162 a share prosided at least 50 shares are tendered to him. If fewer than 50 shares are teadered, the deal is off. 1 Shareholders thus wust decide whether to tender to Auric, to the White Knight, of not. at all. Given the coenpeting ofer, is it still a strictly dominant strategy for each shasedvoliler to tender to Auric