Suppose that there is a game called “the dollar auction game.” This game involve

Question

Suppose that there is a game called “the dollar auction game.” This game involves auctioning a dollar bill to two individuals. The rules of the game are as follows: Bidding starts at $0.05 and increases in five-cent increments. A bidder can drop out of the auction at any time by raising a white card and says “Surrender.” When this happens, the dollar bill goes to the bidder who did not drop out and the price is the amount of his last bid. The loser, however, must also pay the auctioneer the amount of his last bid. For example, assume that player 2 bids $0.80 and player 1 bids $0.85. Then player 2 drops out, player 1 wins the dollar for $0.85 and player 2 must pay $0.80 to the auctioneer. What is the outcome to this game? Would you play, and why or why not?

Explanation / Answer

Answer : The outcome of the game is player 1 play and player 2 not play. Because player 1 is the highest bidder and player 2 has no sufficient dollars to bid against player 1. Therefore player 2 will not play.

Yes, I will play but I will use a strategy to be winner or not to lose my money. The strategy is that I will wait for the last bid . After last bid if I see that I have enough money to bid against the last bidder then I will start playing and bid the last bidder . Thus I can be a winner. The other benefit of this strategy is that if I start playing at beginning then there is a strong chance to lose my money. Because which player stop his play he have to deposit his last bid to auctioneer. But by using my strategy I can safe my money.

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