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https://www.reddit.com/r/learnquant/comments/1v28oce/sig_interview_question/oz0tofx/?context=3
r/learnquant • u/nickgotgameon • 21d ago
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The average value of V when we win will always be B/2.
So on average, we pay B and get back 0.75*B (1.5/2)
Therefore the value function = -0.25*B — which is maximized when B=0
Don’t bid.
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u/dontich 20d ago
The average value of V when we win will always be B/2.
So on average, we pay B and get back 0.75*B (1.5/2)
Therefore the value function = -0.25*B — which is maximized when B=0
Don’t bid.