13 You have invented a new product: the HAL DVD player.

Each of 1,000 potential customers places a different value on this product. A consumer’s valuation is equally likely to be any number between $0 and $1,000. It costs $100 to produce the HAL player. During a year in which we set a price p for the product, all customers valuing the product at

$p or more will purchase the product. Each year, we set a price for the product. What pricing strategy will maximize our expected profit over three years? What commonly observed phenomenon does this problem illustrate?