Problem 6 (Experiment Design) Consider an asset market experiment that lasts for 10 periods. In each period, the asset pays a dividend of -4,-2,0, 2, 4 with equal chance. At each period, subjects trade their asset for money over a continuous double action market. After 10" period, the asset is worthless and traders keep their money. (1) What is the rational expectation price (or expected dividend) of this asset at each period? Period 1 2 3 4 5 6 7 8 9 Price 10 (2) Suppose we have the following realizations of money dividend for period 1 and 2 from this asset: Period 1:4 and Period 2: 4 Then, what would be probability that this asset gives a dividend of 4 in Period 3? Why? Problem 6 (Experiment Design) Consider an asset market experiment that lasts for 10 periods. In each period, the asset pays a dividend of -4,-2,0, 2, 4 with equal chance. At each period, subjects trade their asset for money over a continuous double action market. After 10" period, the asset is worthless and traders keep their money. (1) What is the rational expectation price (or expected dividend) of this asset at each period? Period 1 2 3 4 5 6 7 8 9 Price 10 (2) Suppose we have the following realizations of money dividend for period 1 and 2 from this asset: Period 1:4 and Period 2: 4 Then, what would be probability that this asset gives a dividend of 4 in Period 3? Why