Interesting problem, though I was disappointed with the answer of $1.01.
Seems like the extra contracts you get from bidding higher never quite make up for the extra losses you get from bidding higher. Optimization problems for which the answer is an extreme point arent very interesting.
An employer is required by law to pay his workers at least minimum wage, how much should he pay to maximize profit? Answer: minimum wage.
Thursday, April 21, 2005
I think the answer should be 2.
Since if you bid 2.
1/100 probability is you get a tender of oil worth 1$ in this case you have loss of (.5$).
1/100 probability is you get a tender of oil worth 2$ in this
case you have benifit of (1$).
So overall you have benifit of .5 $ on Average.!!!!
Friday, June 03, 2005
I think if you bid $2, then you won't win the second contract - though the problem is not explicit about what happens in a tie. If you bid $2.01 then I think that is worse than bidding $1.01 because you lose the extra penny on two deals instead of one.
Thursday, June 09, 2005
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