I want to buy a used ipod. I value good condition ipods at $50 each and bad condition ipods at $5 each. 50% of all used ipods are good and the other 50% are bad. I am a risk neutral consumer.
The people selling the used ipods value the good ones at $30 each and the bad ones at $0 each. The people selling the ipods are also risk neutral.
Neither of us know if an ipod is good or bad. How much should I offer for an ipod, as a buyer? How much would a seller want for an ipod?