Question
Two museums, one and 2, will be participating in the auction to obtain the portrait. The portrait is very valuable, Museum 1 valuates it at
Two museums, one and 2, will be participating in the auction to obtain the portrait. The portrait is very valuable, Museum 1 valuates it at $70 million and 2 values it at $80 million. The auction rule requires 1 and 2 to simultaneously submit a bid for the portrait. However, there are strict rules on which numbers Museum 1 and 2 can submit as a bid. In particular, 1 to submit one of the following bids (10,30,50,70,90) in millions USD and 2 to submit one of the following (20,40,60,80,100) The museum who submits the highest bid wins the Painting and pays an equal price to its bid. The winning museum's payoff equals its valuation of the item minus the price it pays, whereas the losing bidder's payoff is 0.
1) Write down the strategic form of this game
2) find all pure strategy nash equilibria of this game you write in part 1
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