432.The Winner's Curse
★★★optimal stoppingCh. 6 — Random Variables and Expectation444+ Problems in Probability
You bid on a painting whose value is uniform on . If your bid exceeds , you win it (paying your bid) and sell it to a museum for . What bid maximizes your profit? (If no bid can profit, bid .)
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If your bid wins, what do you learn about — and what is the painting worth to you *conditional on winning*?
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