Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Help solving my assignment....be sure QUESTION 3 You won $200M ($200,000,000) playing the lottery. Two charities have approached you for a donation. You summoned the

Help solving my assignment....be sure

image text in transcribedimage text in transcribed
QUESTION 3 You won $200M ($200,000,000) playing the lottery. Two charities have approached you for a donation. You summoned the directors of the two charities and informed them that they will play the following sequential game: First, the director of Charity 1 (call her D, ) will make a public request, which can be any integer dollar amount, starting from $1 and up to $200M. Then the director of Charity 2 (call him D, ) - having heard D, 's request - will announce his own request, which, again, can be any integer dollar amount starting from $1 and up to $200M. You inform them that one of your objectives is to punish greed and thus you will proceed as follows: Let d, denote the amount requested by D, and d, the amount requested by D, . If d, > d, then D, - being the greedy one - will get nothing, while D, will be rewarded with two times what he asked for, up to $200M; that is, D, will get min (2d,, 200M} . Symmetrically, if d, 0. Vm -c if she exerts effort The individual has an initial wealth of W and faces a potential loss of /. The probability of her incurring a loss is p, if she exerts effort and p,, if she chooses no effort, with 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Libby, Short

6th Edition

978-0073526881

Students also viewed these Economics questions