Problem

Luann and Cheryl inherit an emerald necklace worth $1000 from their great-aunt. They can...

Luann and Cheryl inherit an emerald necklace worth $1000 from their great-aunt. They cannot both keep the necklace, so the women use the method of sealed bids to decide who will keep it.

Luann makes a bid of $1100 while Cheryl makes a high bid of $2000, even though she knows the necklace is worth much less. Explain why Cheryl has just put herself at a big disadvantage.

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Solutions For Problems in Chapter 4.2