Jim has two days to sell his car

Operations Management Nov 09, 2020

Jim has two days to sell his car. Jim estimates that in the second day a buyer will show up and his value for the car will be drawn from U [2000, 10000]. He also estimates that one buyer will arrive in the first day with value drawn from U [a, b]. What is the minimum price Jim will set on the first day, as a function of a and b? Hint: First, figure out what is happening in the second day.