Can someone please elaborate and explain how to get the answer for Q3) thanks
The following is the model you should study in the following 4 questions. (If necessary, round your answers to the third decimal point.) There is an election with two candidates: A and B. Candidate B has valence 6 E {0, 1}. Candidate A is committed to a platform 13;; = 0. Candidate B instead can choose any platform [)3 E {0, 1}. Voters prefer platform 0 but they also care about the "valence" of the candidates. In particular, if they elect candidate A they get a payoff of 0. If they elect candidate B they get a payoff equal to pB + [(9, with k > 1. A lobby proposes to candidate B the following deal: the lobby will finance B's campaign for a value of m if B runs on platform p3 = 1. Financing a campaign provides no direct benefit for the candidate and the campaign itself contains no direct information about any quality or valence of the candidate. Everybody knows that candidate B had valence 6 = 1 with probability 71' = 1/3. Both the candidate and the lobby observe 9 but the voter does not. The voter observes whether the lobby and the politician agreed on a campaign and the size of it, i.e., mm However, with probability 0' E (0, 1) the voter may also directly observe 6 just before the election lie, with probability 1 0' the voters does not observe 6). SECOND QUESTION: Suppose that as a voter you know that the lobby and candidate B would agree on some money m with probability 0 if 9 = 0 and probability 1/3 if 6 = 1. Suppose you do not observe 0 but you see that candidate B runs a campaign that costs m. What should you believe the probability that 9 = 1 to be? One possible correct answer is: 1 THIRD QUESTION: Using the same information as in the previous question, suppose you do not observe 9 but you see that candidate B DOES NOT run a campaign that costs m. What should you believe the probability that 9 = 1 to be? One possible correct answer is: 0.25