What is the optimal strategy


Alice and Bob are at a strange auction. The item up for auction is $ 20. The rules are that no one can bid twice in a row and that the highest bidder gets the $ 20. Also, and this is very strange, the highest bidder and the next highest bidder have to pay their bids. For example, if Bob bids $ 5, Alice bids $ 6, and Bob then passes, Alice gets the $ 20 and pays $ 6 to the auctioneer and Bob pays the auctioneer $ 5. Both have $ 100 to bid. What is the optimal strategy?

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Macroeconomics: What is the optimal strategy
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