[Gigglegirl]

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I wouldn't say the construct is clumsy. The problem is designed to give a mathematical answer (2) that seems absurd. If you made the penalty bigger, the mathematical answer wouldn't seem so odd.

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Ok, I can buy that. This is not my field so if I'm completely missing the point here please feel free to correct me.
Why I say the construct is clumsy is because if you are going to invent a scenario, you should make it at least halfway plausible.
I see no reason why people would drop to $2 simply to outdo the opponent when mutual self interest says 100/100 is obvious. What is the incentative to outdo the opponent?
You could use the ever decreasing price total logic to arrive at $2 but as soon as you do, you re-evaluate, follow the same logic and start moving up again due to the fact that both opponents realize they are out playing each other. No?
Also what we haven't considered is the actual price of the goods. If they cost say $50, then $50 is actually the new 'zero'. If both opponents start undercutting each other below the actual value of the goods then they are both losing irrespective of who 'wins'.
Ummm, now I'm confusing myself......
Ok, you're right Aaron, it's just a mathematical problem and I can buy the logic. [img]/images/graemlins/tongue.gif[/img]