un tormento senza fine....

Per tutti coloro che lo aspettavano con ansia....eccovi il compito del secondo appello di Game...

Question 1

Consider an Agent who can exert effort e; effort can take two values: (0, 1). The disutility of effort for the agent is equal to ψ(e) with ψ(0)=0 and ψ(1)=ψ. The agent receives a transfer t from the principal and his utility is U=t- ψ(e). Production is sthocastic and effort affects the production level as follows: q can take two values: Prob(q=qH ‌‌given e=1)=πH whilst Prob(q=qL given e=0)=πL with πH › πL. The principal’s payoff is U=v(q)-t where v’(q)›0 and v’’(q)‹0.

a) suppose effort is verifiable. Find the contract that induces high effort and the condition under which it is optimal. Discuss your answer and the characteristics of this game.
b) Suppose effort is not verifiable. Find the contract that induces high effort and the condition under which it is optimal. Discuss your answer and the characteristics of this game.


Question 2

Assume that a manufacturer’s product is sold to the public though a monopolist retailer, facing a demand function q=100-p. the manufacturer sets an intermediate price pi at which it sells the product to the retailer. At this price, the retailer chooses to buy a quantity q which it sells to consumers at price p. assume the manufacturer has a constant marginal cost of 60 and fixed cost of 10 while the retailer incurs fixed distribution cost of 20 per unit of output.

a) discuss the characteristics of this game
b) find the subgame perfect equilibrium prices and quantities. Discuss your reasoning
c) suppose that the manufacturer and the retailer merge and form a single firm. Find the equilibrium price and quantity in this case, discuss the incentives of the two firms to merge and the effect of the merger on consumer surplus.

Grazie a Paoletta che lo ha trascritto...
Bacetti bbelli eebliii

PS stasera dovrei essere al Circolo, se qualcuno di voi pensa di capitarci ci vediamo!