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Equilibrium redraw threshold in a uniform duel

Question

Two players each privately draw a value from U(0,1)U(0,1). Each may, without the other knowing, discard their value and take a fresh U(0,1)U(0,1) draw instead, which they must keep. The higher final value wins. In equilibrium both players use a rule of the form "redraw if below kk". Find kk to three decimal places.

Short answer

k=5−12≈0.618k=\tfrac{\sqrt5-1}{2}\approx0.618. Against an opponent using threshold qq, compute your winning probability as a function of your own threshold pp by splitting on who redraws. In equilibrium the player holding exactly kk must be indifferent between keeping it and redrawing, which reduces to k2+k−1=0k^2+k-1=0.

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