Author Question: Alan is offered a gamble. Heads he wins 100, tails he wins 20 . If the game costs 60, would he play? ... (Read 131 times)

nmorano1 · **on:** Jul 1, 2018

Alan is offered a gamble. Heads he wins 100, tails he wins 20 . If the game costs 60, would he play?
a. Yes he would play since the expected value is equal to the price of the play
b. Yes he would play since the expected value of the play is higher than the price of the play
c. No he would not play since the price of the play is higher than the expected value
d. No he would not play since this is a fair bet and he is not being offered any risk premium

Question 2

Bid-rigging has all of these features EXCEPT
a. It is a collusive agreement
b. The bid-riggers pay a smaller amount than without bid-rigging
c. Bid-riggers need an auxiliary mechanism to allocate the good within the bid-riggers
d. Bid rigging is usually a legitimate and legal strategy for the buyer-side