Suppose we are interested in bidding on a piece of land and we know one other bi

Question

Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $10,100 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10,100 and $15,100. a. Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)? .38 b. Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)? C. What amount should you bid to maximize the probability that you get the property (in dollars)? 15,000

Explanation / Answer

The amount that you shoudl invest should be the highest of what the competitor can invest. Thus it is 15100

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