Problem

Five thieves have just looted a bounty of 1000 gold coins. The loot has to be divided among them and therein lies the problem. It is then decided that the youngest one will come up with a strategy of division, and the rest will put the strategy to vote. If the strategy is voted with a majority, it will be accepted and will be carried out. Otherwise, the youngest one will be shot and the second youngest will be asked to do the same...and so on. So the problem is, if you are the youngest thief, what will be your strategy, to maximize your share of the bounty? (Assume all thieves have different ages.)

Thieves base their decisions on three factors. First of all, each thief wants to survive. Secondly, each thief wants to maximize the amount of gold coins he receives. Thirdly, each thief would prefer to throw another overboard, if all other results would otherwise be equal

Update (11/12/09):

Solution provided by Jaadu ... Better explanation by Maoo with arguments from PD

Solution:

Highlight the part between the * symbols for the answer.

* When there are only two thieves left, oldest would never accept anything offered by younger, so younger would anyway get killed. So, 2nd oldest would never let the third oldest get killed. So, whatever the 3rd oldest offers to oldest and 2nd oldest, it would be accepted. So, he would offer them nothing and 2nd oldest would have no choice but to support him. Since, this way, oldest and second oldest are not getting anything, they would prefer whatever the 4th oldest proposes. So, fourth oldest would give 1 coin to oldest, 1 to 2nd oldest and nothing to 3rd oldest. They will have no option but to support him. So, if the youngest child offers 2 coins to oldest, 0 to 2nd oldest, 1 coin to 3rd oldest and 0 coins to 4th oldest.. The oldest and third oldest thieves would support him.