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You and two other people are to place bids for an object, with the high bid winning. If you win, you plan to sell the object immediately for 10,000. How much should you bid to maximize your expected profit if you believe that the bids of the others can be regarded as identical and uniformly distributed between 7,000 and 10,000? Note that it is known that the bids of others are independent.

You and two other people are to place bids for an object, with the high bid winning. If you win, you plan to sell the object immediately for 10,000. How much should you bid to maximize your expected profit if you believe that the bids of the others can be regarded as identical and uniformly distributed between 7,000 and 10,000? Note that it is known that the bids of others are independent.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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You and two other people are to place bids for an object, with the high bid winning. If you win, you plan to sell the object immediately for 10,000.
How much should you bid to maximize your expected profit if you believe that the bids of the others can be regarded as identical and uniformly distributed between 7,000 and 10,000? Note that it is known that the bids of others are independent.

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