You are negotiating with someone to buy their company. The company is either bad (worth 0 to everyone) or good (worth 1 to the seller and worth 2 to you). Initially, neither you nor the seller know whether the company is good or bad (and think the two possibilities are equally likely). The seller (and only the seller) gets the results of an internal audit that examines the state of the company. The audit is either positive (indicating the company is good) or negative (indicating the company is bad). Both you and the seller know that the audit is accurate 70% of the time. (When the state is good, the report is positive with probability 0.7; when the state is bad, the report is positive with probability 0.3). You get to make a take-it-or-leave-it offer to the seller. You know the seller is perfectly rational. How much should you offer?