Please help me resolve the following problem, relating to "Economics
of Information":

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"You are thinking of buying an oilfield. The probability that there
are zero barrels of oil in the field is 1/3, the probability that
there are 30 barrels of oil in the field is 1/3, and the probability
that there are 120 barrels of oil in the field is 1/3. The current
owner of the oilfield could earn a profit of $1.00 on each barrel of
oil and so, for example, if there are 30 barrels of oil he will earn a
profit of $30. You are a very efficient oil producer and you could
earn a profit of $1.50 on each barrel of oil. Therefore, if there are
30 barrels you would earn a profit of $45. The owner has done
extensive geological studies and knows the number of barrels of oil in
the field, but you do not. You are risk neutral.

For simplicity, assume that if the current owner is indifferent
between accepting and rejecting your offer he will accept. What the
maximum price you would offer for this oilfield?"

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Thanks!

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Request for Question Clarification by iamchmod-ga on 16 Dec 2002 17:47 PST

Is it okay to ignore the variable of time in this problem?

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Clarification of Question by 3gwireless-ga on 16 Dec 2002 17:49 PST

I do not think time is a siginicant factor in this economic question.