dmg's Quiz for Tuesday!

sarahlouise210

If the real value is somewhere between 0 and £1000 then you would have to bid more than £1000 to ensure you win the bid (as it states you will only win if you bid more than the real value)
I would bid £1001 ... what I do not get is how you could sell it for 150% of its "real" value ??

Alfie_E

dmg24 wrote: »

My first answer: bid nothing. You are not going to win, but you are not going to lose anything.

Assume the real value is evenly distributed between £0 and £1000. For any item you win, the distribution will be evenly between £0 and the bid price (less a penny). That makes an expected real value of half the bid price. As the sale price is 50% more than the real value, the expected sale price will be 75% of the bid price. The game is stacked against you. Therefore, your first answer was right.