Quote:
Originally Posted by RML604
This would actually be really interesting to see.
If you're going last and you have an idea of what the price is in your mind, your best bet is to simply guess $1 above the person who is closest to but still under the price you're thinking of, right?
Somewhat. You pick what gives you the best chance of winning, LDO. While similar to what you are thinking, it's not *exactly* the same.
Say you think the price is 895 if you aren't sure, and the previous bets are 700, 850, 900, 1200. You probably go with either 701 or 901. You should absolutely, going last, never bet anything other than $1 more than someone or $1. The only exception is if you absolutely know the price and want to win the bonus for getting it right.
3rd guy wants to leave you a decent range where you won't try to "overbid" him. So if it was 700 and 900, you might bet something like 820 to try make a decent range but chances the guy after you "overbid" someone else. If you bet 701, you'll get screwed when he bets 702.
The 2nd and 1st guys are in a much tougher spot since they are the ones most likely to be "overbid", so I'd probably guess the first guy's bet is to go a little on the high end, so people are scared to go one more than him. 2nd guy should probably pick a small range under the first guy to prevent anyone from wanting that gap.
You also want to lean towards letting someone want to take $1 at the end, since, although it gives them a better chance at winning, it gives you a better shot of having them not take 1 more than you.
I'm sure an economics graduate student has done all of this analysis before if we just search enough. We could probably simulate it where there is a range of prices that we think it's in, with a normal distribution, and then use game theory to work it out backwards where to go.