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?
Ok, my question is: Are we forced to bid? Because, if we are, I think the bidding will continously rise.
Here's my reasoning. Logicaly, the bidding should rise up to $.99 without people giving it a second thought. However, there is still someone who has not made a bid and must, he will be forced to break even and bid a $1. However, mr. unlucky 99-cents would rather lose 1 cent then 99, so he will bid $1.01. Now, disappointed dollarboy would rather lose 2 cents than a buck, so he will bid $1.02, and so forth...
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Posted by Dave
on 2003-06-03 17:00:19 |