I have a one dollar bill. there is a crowd of people around me. I hold it up and say that i will auction the one dollar bill off, and the dollar would go to the highest bidder.

The catch? the first AND second highest bidder both have to pay me whatever they bid. For example, if the bidding stops when someone bids 1.00 and the next person bids .95, then I get 1.95, and the winner gets nothing, the second person loses 95 cents.

What would you do if you were at this auction, and there had to be at least one bid? What is the "winning" strategy, assuming that everyone will want to do what is best for them?

(In reply to Solution???? by Jonny Doe)

but this is not a winning strategy as described in the problem, this is a break even strategy. There is some way to maximize your *potential* cash inflow. That is the question

Posted by Cory Taylor on 2003-06-03 04:13:13