The Vineyard Auction Trap

A family vineyard is for sale. Its true value V V (in millions) is uniformly distributed on [0,1] [0, 1] and is known to the family but not to you. You submit a single sealed offer B B ; the family sells if and only if B≥V B \ge V . Under your management the vineyard would be worth 1.5V 1.5V . What offer B B maximizes your expected profit?

Answer

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