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 $10,000 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10,000 and $15,000. d. Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount $15,000 to maximize the probability that you get the property but a friend suggests you bid $13,000. If your objective is to maximize the expected profit, what is your bid? Choose: (Stay with $15,000, it maxi
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 $10,000 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10,000 and $15,000.
d. Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount $15,000 to maximize the probability that you get the property but a friend suggests you bid $13,000. If your objective is to maximize the expected profit, what is your bid?
Choose:
(Stay with $15,000, it maximizes expected proft/ Bid $13,000 to maximize exoected profit)
What is the expected profit for this bid (to 2 decimals)?
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