Insight · ★★★☆☆ · ~7 min
Single Bid (Winner's Curse)
Bid on a company worth 1.8× its unknown value to the owner. What's optimal?
by MindYourPuzzle
An item's value to its owner is a uniform random integer between $0 and $100. You value it 80% more than the owner. You make one bid: if your bid ≥ owner's value, you buy it.
What should you bid to maximize expected profit?
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