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(5): Solution by ryan smith)

I just thought of something. Could you (or someone bidding for you) bid on the dollar yourself? This would make the bid of 99 cents a bad idea, or even bidding a dollar for the first bid have problems.

If you bid 99 cents and I bid a dollar, (I being the person who is auctioning off the dollar, or the person bidding for/with the auctioneer), I would get your bid of 99 cents.

Even if you bid a dollar (as your first bid), I would bid a dolllar and a cent. Then I would lose one cent, but gain your bid of a dollar.

Even if you bid two dollars, then I would bid two dollars and a cent. I would still have a net win of 99 cents against what anyone bid.

Posted by Gamer on 2003-06-08 11:08:25