Re: entrapment game

In article <[EMAIL PROTECTED]>,
 <[EMAIL PROTECTED]> wrote:
>An auctioneer announces to an assembled group that he is going to auction
>off a $20 bill to the highest bidder. After someone opens the bidding, each
>successive bid must exceed the previous one by 50 cents. Once the bidding
>stops, the highest AND the second-highest bidder give their bids to the 
>auctioneer. The highest bidder gets the $20 bill and the second-highest
>bidder gets nothing.
>
>What's the optimal bidding strategy?

Don't play.  If you're feeling rude, make one bid at 19.51, but my guess is
someone would outbid you anyway.

>This auction is mentioned as an "arms-race" example in "The Winner-Take-All 
>Society" by Robert H. Frank and Philip J. Cook. They say that in over two 
>hundred auctions at the Northwestern MBA program, the top two bids have always 
>totalled at least $39, with a maximum of $407.

Now that goes a long way towards explaining why MBAs are targets of
derision among the technically skilled.
-- 
Matthew T. Russotto                            [EMAIL PROTECTED]
"Extremism in defense of liberty is no vice, and moderation in pursuit
of justice is no virtue."  But extreme restriction of liberty in pursuit of 
a modicum of security is a very expensive vice.