Question
The seller considers hiring another previous customer, Jaimie, to rate the product online. Jaimie can choose a rating from zero to five stars. If v=0,
The seller considers hiring another previous customer, Jaimie, to rate the product online. Jaimie can choose a rating from zero to five stars. If v=0, Jaimie charges the seller $20 for each star she gives (e.g., she charges $40 to give two stars). If v=100, she charges $15 for each star she gives.
Let s0be the number of stars Jaimie gives in her rating if v=0; let s100be the number of stars Jaimie gives in her rating if v=100.
Is there a perfect Bayesian equilibrium in which s0< s100with probability 1?
A. No
B. Yes, and the star rating (s_0, s_100) is unique in this type of perfect Bayesian equilibrium.
C. Yes, and there are multiple perfect Bayesian equilibria of this type with different star ratings.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started