The expected value of the outcome of the bid is $0.18
So let's start by counting how many bids are placed up to a total of 160.
100*160 = 16000.
What will be your arbitrary bid? As each bid has an equal chance of success, the average of all bids is used. (One cent plus 160 dollars) / 2 = 80 dollars (rounded)
Your odds of winning are 1/16000 (1 bid out of 16000).
If you win, your profit is 1920 ($2000 minus $80.00).
1920/16000 is $0.12
Your cost to enter the auction is $1, and your average winning offer is $0.12.
The result is $0.18 (0.12-1=-0.88).
Thus the expected value of the outcome of the bid is $0.18
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45%
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v = 1.444
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v = 26/18
v = 1.444
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3 hours and 51 minutes
Step-by-step explanation:
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