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 re: Bang for the Buck by Jonny Doe)

It also states that 'everyone will want to do what is best for them'. The only way to reconcile the seemingly conflicting requirements of 'at least one bid' and 'freedom to choose the best strategy' is the interpretation that 'in order for the dollar to be won, there must be at least one bid'.

Therefore, no one will bid and the dollar won't be 'won' and everyone will break even.

Posted by Sanjay on 2003-06-03 09:37:45