Interesting Game That My Prof Played

[AcesUp46 0]

Today, my Decision Making (a psyc class) instructor played a very interesting game. Here's how it goes.He has a real $20 bill that he wants to auction off to the class. Bidding starts at $1 and increases in $1-increments. The winner of the bid gets the $20 bill and pays my instructor whatever his winning bid amount is. The 2nd highest bidder however ALSO has to pay him the amount that he had bid. For example, if John bids $7, Sally bids $8 and there are no other bids, then Sally pays him $8 to get the $20 bill while John has to pay him $7.So he opens the bidding to the class of about 25 students. Bids were coming from everywhere until it got to about $15 when it then became a battle between two girls. They kept going back and forth until the final winning bid of $28 was made. They had to pay the money to my instructor.This is one of those situations where thinking of the optimal strategy ahead of time was crucial. The 2 girls didn't take the time to sit back and think before engaging in the bidding and subsequently getting caught up in a terrible spot. I felt kinda sorry for the girl who had to pay $27 cos for a college student, that may be a significant amount of money.The lesson here is very applicable to poker I think. Think clearly about what your best play in a situation is and make sure that it doesnt commit you to a bad position.EDIT : My prof also said that the worst players in this game are corporate executives and CEOs. The closing bid was often in the $5K range for the $20-bill.EDIT : Impt info also....We were not allowed to communicate with each other in order to prevent collusion.

[kkcountry 0]

So he opens the bidding to the class of about 25 students. Bids were coming from everywhere until it got to about $15 when it then became a battle between two girls. They kept going back and forth until the final winning bid of $28 was made. They had to pay the money to my instructor.

were they minbidding?it's obviously -EV to bid on the 20 in a room full of idiots students.and it would have been +EV for one person to bit $0.01 (preferably canadian) take the 20, and buy the class pizza.

[AcesUp46 0]

were they minbidding?it's obviously -EV to bid on the 20 in a room full of idiots students.

LOL...They were indeed min-bidding. I agree that a lot of the students were idiots since they didn't bother to think about the consequences...

[no not baxter 0]

$5k?edit: nutbar?

[no not baxter 0]

Nutbarring 2c/4c fixedJust search "moneyinbag" and join my table!

[no not baxter 0]

hit and run wham?

[AcesUp46 0]

hit and run wham?

Yes, first hand and I take down a 25BB pot. SHIP it.

[Fupo 0]

$5k?

Yeah, but they win $20!

[AcesUp46 0]

Yeah, but they win $20!

A $5000 $20-bill...LOL

[cwik 0]

+1...err bid $1

[Dogpatch 2]

Sounds like the Prof was just hustling money for strippers and blow. I mean, open the bidding at a $1... why not just bid $20 right off the bat? You take the down the $20 and no one would outbid you unless they just wanted to "beat" you at something. If you bid anything less, you've committed yourself to paying that money with no guarantee of winning. So what was the point of the exercise? And did the girls feel stupid for paying over $50 combined for a $20 bill?

[alanstats 0]

Optimal strategy is to fire off a 19 dollar bid to start. Noone would then bid after you because they would be comitting themselves to at best an even money situation. You would then take down the 20 at a 1 dollar discount. Very +ev.

[AcesUp46 0]

Optimal strategy is to fire off a 19 dollar bid to start. Noone would then bid after you because they would be comitting themselves to at best an even money situation. You would then take down the 20 at a 1 dollar discount. Very +ev.

No. Bidding starts at $1 and increases at $1 increments with every new bid.

[alanstats 0]

Also, did your proffesor end up screwing them? Do you think after class he gave them their money back?

[AcesUp46 0]

Also, did your proffesor end up screwing them? Do you think after class he gave them their money back?

I'm not sure. I hope he did cos the $27 girl seemed rather upset by it.

[psujohn 0]

The optimal strategy in this game is clearly to not play. If you bid anything less than 19 you'll be outbid by someone who wants to make a $1. If you bid 19 you'll be outbid by the guy who bid 18 so he can save money. Then you're forced to bid 21 to try to cut your loses. Without collusion it's -EV.

[AcesUp46 0]

The optimal strategy in this game is clearly to not play. If you bid anything less than 19 you'll be outbid by someone who wants to make a $1. If you bid 19 you'll be outbid by the guy who bid 18 so he can save money. Then you're forced to bid 21 to try to cut your loses. Without collusion it's -EV.

That's correct. Clearly the girls didn't think of that.

[psujohn 0]

Actually if you're in a room full of intelligent people you want to bid $9. Someone else can bid $10 and then you can chop the $20 for $.5 in profit each.

[bassplayer45459 0]

It sucks that two people can not do simple math and figure it out...but the second girl should have re-raised 3 times the original bid to not give the other girl odds to bid at the bill again. On a side note, this reminds me of a classic over heard remark by my friend freshmen year in college. He is walking across a bridge the day after it had just rained, and next to him was a sorority girl who remarked "Wow, when did they decide to lower the bridge?" insert rim shot, but no, the girl was actually serious.

[JSHamm 9]

It sucks that two people can not do simple math and figure it out...but the second girl should have re-raised 3 times the original bid to not give the other girl odds to bid at the bill again. On a side note, this reminds me of a classic over heard remark by my friend freshmen year in college. He is walking across a bridge the day after it had just rained, and next to him was a sorority girl who remarked "Wow, when did they decide to lower the bridge?" insert rim shot, but no, the girl was actually serious.

Well...did they?

[Actuary 3]

cool game.

[Dogpatch 2]

Ok, I misunderstood. If you can only bid a $1 each time, then clearly there is no point in playing. So the exercise was to see who would take the time to make the decision that it was a no-win game? So if he could get a unique bidder on each round... he could make $358? What his total take? Strippers and blow range?

[psujohn 0]

The complete lack of reading comprehension is startling. The prof gets the winning bid plus the next lowest bid. The number of unique bidders is meaningless. His potential profit is limited only by how much people are willing to bid over $10.The only bid I'm willing to make in this game is $9.If no one bids $10 you get an $11 profit.If someone bids $10 but no one bids $11 you can approach the winner and ask for a chop of the profit. If he's an *** you're out $9 but at least the professor makes nothing. If he agrees you get your $.50 profit.If someone bids $11 then you get to sit back and laugh at the people that can't do basic math.It's an interesting study in short-sighted greed. With a $10 bid out there someone is going to think "Hey I can bid $11 and make a profit". A level 2 thinker will say "If I bid $11 someone else will bid $12 and I'll be out $11".

[Actuary 3]

each "winning" bid, once you are heads up, is an instant $18 gain.albeit short lived.

[Dogpatch 2]

The complete lack of reading comprehension is startling. The prof gets the winning bid plus the next lowest bid. The number of unique bidders is meaningless. His potential profit is limited only by how much people are willing to bid over $10.The only bid I'm willing to make in this game is $9.If no one bids $10 you get an $11 profit.If someone bids $10 but no one bids $11 you can approach the winner and ask for a chop of the profit. If he's an *** you're out $9 but at least the professor makes nothing. If he agrees you get your $.50 profit.If someone bids $11 then you get to sit back and laugh at the people that can't do basic math.It's an interesting study in short-sighted greed. With a $10 bid out there someone is going to think "Hey I can bid $11 and make a profit". A level 2 thinker will say "If I bid $11 someone else will bid $12 and I'll be out $11".

I suppose it could be a reading comprehension problem. I read it once, earlier this morning then later made my post about the unique bidders. Forgive me for not remembering the details of a forum post, hours later. Now, suppose you get to be the $9 bidder, the $8 bidder is going to bid $10 just to beat you for outbidding him and he certainly won't be interested in sharing his profit after he wins (if he wins). Since you cannot collude before hand, noone would ever agree to a split after they already won.