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- #1

- Jan 26, 2012

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There is one extra rule though: If you are the highest bidder you win the money but if you are the second highest bidder you must pay your losing bid nevertheless.

You and a group of students begin the bidding and quickly it comes down to you and one other person. He bids \$98, you bid \$99 and he bids \$100.

What is the best strategy from this point on? Try to find a way to describe your optimal decision from this point on and assuming your opponent can make a large range of choices as well from this point on.

(Note: this POTW is a little different so to receive recognition for this problem your strategy must be non-dominated by another possible strategy and you must give your reasoning)

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Remember to read the POTW submission guidelines to find out how to submit your answers!