Suppose you and a logical but competitive friend are at a $1 auction. The auction works as such, you each start the contest with $.50 and you bid on $1 bills. The highest bid for each round wins $1 minus the amount bid AND loses their actual bid. So for example, if in round 1, you bid $.20 and win the $1 then your new balance would be $.50 - 0.20 + (1-0.20) = 1.10. If a tie occurs, the amount gained for each individual (i.e. 1 - bid) is divided by 2 but the full bid is still subtracted from the totals. Lastly $0 bets are not allowed.

Knowing that your friend is competitive and logical...

how much should you bid?

what would be your expected payout after five rounds?

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## BMAD

Suppose you and a logical but competitive friend are at a $1 auction. The auction works as such, you each start the contest with $.50 and you bid on $1 bills. The highest bid for each round wins $1 minus the amount bid AND loses their actual bid. So for example, if in round 1, you bid $.20 and win the $1 then your new balance would be $.50 - 0.20 + (1-0.20) = 1.10. If a tie occurs, the amount gained for each individual (i.e. 1 - bid) is divided by 2 but the full bid is still subtracted from the totals. Lastly $0 bets are not allowed.

Knowing that your friend is competitive and logical...

how much should you bid?

what would be your expected payout after five rounds?

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