Skip to content

Marble box game with payoffs that shrink

Question

Players AA and BB each own 100100 marbles. Simultaneously and secretly, each chooses how many of their own marbles to put into a shared box, anywhere from 11 to 100100; say AA contributes aa and BB contributes bb.

Marbles are then drawn from the box twice, with the drawn marble returned before the second draw. Every time a marble belonging to AA is drawn, an outside party pays AA the amount 100−a100-a; every time one of BB's marbles is drawn, BB is paid 100−b100-b.

If both players act optimally, what is AA's expected total payout over the two draws?

Short answer

6767. Per draw AA earns aa+b(100−a)\tfrac{a}{a+b}(100-a); the best response is a=b2+100b−ba=\sqrt{b^2+100b}-b, whose symmetric fixed point is a=b=1003a=b=\tfrac{100}{3}. Among integers, 3333 is the best response to 3333, so both put in 3333 marbles, and AA earns 12⋅67\tfrac12\cdot 67 per draw, i.e. 6767 over two draws.

Adapted from QuantQuestions.io; question and answer rewritten by SelfMadeQuant.com.

See the hint and the full worked solution in the question bank (free account).

Open the worked solution

Lessons behind this question

Start with a free lesson: Expectation, Variance and Covariance is part of a free topic. Create a free account, no card needed, to read it in full with worked solutions.

Read it free