In the Method of Sealed Bids, the total value of the item is divided among all the bidders based on their individual bids. The bidder who wins the item must compensate the other participants by paying them their fair share of the item’s value.

Here's how the process works step-by-step:

1. Determine the fair share for each person: Since there are 4 people, each person is entitled to $\frac{1}{4}$ of the value of the item. The highest bid was $4,000, so each person's fair share is: $\text{Fair share per person} = \frac{4,000}{4} = 1,000$

2. Determine the amount to be paid into the kitty: The winning bidder has already valued the item at $4,000 but is entitled to only $1,000 as their fair share. This means the winning bidder needs to compensate the other 3 participants by putting the difference between their total bid and their fair share into the kitty: $\text{Amount to be put into the kitty} = 4,000 - 1,000 = 3,000$

Thus, the winning bidder needs to put $3,000 into the kitty for the other bidders to be compensated.

Would you like more details or have any questions? Here are five related questions you could explore:

1. How is the compensation amount divided among the other bidders?
2. What happens if multiple people bid the same amount?
3. How does the Method of Sealed Bids work if there are more than 4 bidders?
4. What happens if someone bids significantly lower than others?
5. How would this change if two people jointly bid on an item?

Tip: Always ensure that the total payout to others equals the difference between the winner's bid and their fair share!