Recent content by Mig

Oops, you're right, I forgot to calculate the conditional distribution of X. Its conditional mean is B/2, as you say, and that shifts the quadratic to maximize at B=0. ---------- Post added at 05:19 PM ---------- Previous post was at 04:37 PM ---------- B=0 is the best bet if the intention...

Regarding the treasure chest question: Model the price of chest as a random variable X; with the least informative prior, i.e. uniform on [0,1000]. You make a bid B. Your payoff assuming you get the chest is 1.5X - B. Your payoff is zero assuming you do not get the chest. The probability that...