RPG Math - Problem 4

It's time for more RPG Math again! This time, in the spirit of the holiday season, this puzzle is based upon that elusive goal that motivates almost every D+D adventurer - and underpins much of the activity in our real-world economy during the holiday season. That's right, I'm speaking of nothing other than treasure, money, and loot!

Problem 4: Divvying Up The Loot

The Dungeons and Dragons 3.5 edition rulebook contains a section on suggested methods for dividing up treasure. In this section, the book uses an example of a party of four adventurers (A, B, C, and D) who have stumbled across a treasure hoard consisting of 5,000 GP (gold pieces) and a magical shield. It suggests (paraphrased):

If two or more players want the shield, they should bid [on how much it is worth to them]. The highest bidder gets the shield, and the value is added in to the treasure stash when calculating each player's share of the loot. Then everyone gets an equal share, and the player who gets the shield has his amount of gold deducted by that amount. For example, if A won the bidding with 800 GP, then the total treasure size is 5800 GP, so each person gets 1450. That means A would get 650 GP and the shield, while B, C, and D would get 1450 each.

The maximum that a player can bid is his share of the treasure. For example, in this case, A could bid at most 1250 GP (one-fourth of the total of 5000 GP.) In this case, A would end up with the shield while the others would split up the 5000 GP worth of gold.

What is wrong with this section?

Answer is here.