Word problems › Money and shopping › Best buy within a budget
Optimal bid for an object
High school · ●●●○○ 50 pts
The owner's value of an object is uniformly distributed on dollars, and its value to you is . You make one sealed bid of dollars. If is more than the owner's value, he sells it to you and you pay ; otherwise you get nothing. Choose to maximise your expected profit. What bid (in dollars) should you make?