Question: Robin is planning to ask Peggy to the Homecoming dance. Before he asks her, he wants to know what the chances are that she'll say yes. Robin is a scientist so he considers two paths to estimate the probability that Peggy will say yes.
I. Ask 10 of his friends, "Do you think she'll really say yes?"
II. Tell another 10 of his friends, "I'm starting a betting market. I'll pay $10 if she says yes, $0 if she says no. I'm offering this bet only once, to the highest bidder. Start bidding against each other for a chance at $10!"
a. According to the evidence in this chapter, one of these methods will work better. Which one, and why?
b. If the highest bid from Group II is $1 (along with a few lower bids of $0.75, $0.50, and zero), then roughly what's the chance that Peggy will say yes to Robin?
c. If the highest bid from Group II quickly shoots up to about $9, then what's the chance that Peggy will say yes to Robin?