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A seller is recommending a product to a buyer. The price for this product is 5. If the buyer buys, the true value she gets
A seller is recommending a product to a buyer. The price for this product is 5. If the buyer buys, the true value she gets from this product is either v=2 or v=10. Suppose that the buyer's prior belief is Pr(v=2)=0.7 and Pr(v=10)=0.3. Suppose that the seller knows the true value. Based on this knowledge, he can "highly recommend" this product or "stay silent".
In a perfect Bayesian equilibrium, what is the probability that this seller will highly recommend the product when v=2?
A.0
B.Any value between 0 and 1 is correct.
C.1
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