IE 5545 VCG Mechanism Vickrey-Clarke Groves (VCG) mechanism. Four roommates are considering the purchase of a television. One roommate is not in favor of the purchase. Their true valuations are shown in the table below. 1. What is the decision according to the VCG allocation rule. 2. Compute the payment and total utility of each roommate under the VCG mechansim. That is, using the Clarke tax. 3. Suppose that Melvin misrepresents his valuation for "no TV" to be 250? What is his total utility? v (TV) v(no TV) roommate Bud Cartman Melvin Arush 100 120 0 25 0 0 200 0 payment total utility

IE 5545 VCG Mechanism Vickrey-Clarke Groves (VCG) mechanism. Four roommates are considering the purchase of a television. One roommate is not in favor of the purchase. Their true valuations are shown in the table below. 1. What is the decision according to the VCG allocation rule. 2. Compute the payment and total utility of each roommate under the VCG mechansim. That is, using the Clarke tax. 3. Suppose that Melvin misrepresents his valuation for "no TV" to be 250? What is his total utility? v (TV) v(no TV) roommate Bud Cartman Melvin Arush 100 120 0 25 0 0 200 0 payment total utility

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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Consider a town with a single street of 1 km long with 3,000 people spread uniformly along it. Two stores, 1 and 2, are located at the opposite ends of the street and sell the same product (store 1 is locatedattheleftend).Thecostofwalkingist1 =$6perkmtostore1andt2 =$9perkmtostore2for each consumer. The net utility of a consumer located at point x from buying a product at store 1 is U1(x) = 100 – p1 – t1x, where pi is a price of the product at store i = 1,2. The net utility from buying at store 2 is U2(x) = 100 – p2 – t2(1 – x). The average cost of the product for each store is c = 4. (a) Assume that all consumers buy product from the sellers. Find the demand functions Di(p1,p2) and the profit functions πi(p1,p2) for each store i = 1,2 as functions of prices p1,p2.(b) Find the equilibrium prices.
Suppose Jimi has reference dependent preferences over guitars and money as in Tversky and Kahneman (1991). His utility functions are given below. Gains Gains 400 -2 -2 2 Guitars 2$ Losses Losses i-600 -2 What is the least amount of money Jimi is willing to accept to sell one of his guitars? (just enter a dollar amount, i.e., "10o0", not "$1000"
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