Game Theory Optimal Betting
Source:
August 8, 2024
optimization2022Game Theory
Problem Statement
Andy, Bella, and Chris are playing in a trivia contest. Andy has points, Bella has points, and Chris has points. They have reached the final round, which works as follows: [*] they are given a hint as to what the only question of the round will be about;
[*] then, each of them must bet some amount of their points—this bet must be a nonnegative integer (a player does not know any of the other players' bets, and this bet cannot be changed later on);
[*] then, they will be shown the question, where they will have seconds to individually submit a response (a player does not know any of the other players' answers);
[*] finally, once time runs out, their responses and bets are revealed—if a player's response is correct, then the number of points they bet will be added to their score, otherwise, it will be subtracted from their score, and whoever ends up having the most points wins the contest (if there is a tie for the win, then the winner is randomly decided).Suppose that the contestants are currently deciding their bets based on the hint that the question will be about history. Bella knows that she will likely get the question wrong, but she also knows that Andy, who dislikes history, will definitely get it wrong. Knowing this, Bella wagers an amount that will guarantee her a win. Find the maximum number of points Bella could have ended up with.