Question: Hi there, how would I go about setting up the problem? Any advice? You are an avid basketball fan, and you have decided to try

Hi there, how would I go about setting up the problem? Any advice?

You are an avid basketball fan, and you have decided to try to obtain a basketball that Hall-of-Famer Larry Bird once dribbled.Your local high school is having a fund-raising auction, at which one of these basketballs will be auctioned, in a "first-price" sealed-bid auction (in which the highest bidder wins and pays the price that he/she bid).You have decided that you are willing to pay a maximum of $100 for this basketball.You are certain that there will be only one other bidder, and your guess is that the other bidder's valuation of the basketball is between $60 and $180, with a uniform distribution on all values in between.

What bid would maximize your expected value from this auction?Explain why and how you decided on this bid.

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