REAL WORLD TAKEAWAYS

• In an auction, a higher bid has a higher probability of winning (than does a lower one) but reduces your profit.
• An optimal bid can be thought of as the bid with the highest expected value.
• In a two-person bid, the optimal bid is approximately half the item’s value; as more people participate, the probability of any given bid winning decreases, so the optimal bid increases.

MATH OBJECTIVES

• Write and graph a quadratic equation to model a real-world situation
• Write and graph higher-order polynomial equations to describe a real-world situation
• Calculate and model expected value in a real-world context