An All-Pay Auction

lfar:

Martin Shubik invented a famous game-theory exercise, sometimes called “the dollar auction,” where a teacher auctions off a $20 bill to the highest bidder. Bids have to be in round dollar amounts, but the twist is that both the highest and the second-highest bidder have to pay. When uninitiated students start to play this game, someone rushes to bid $3 or $4 dollars for the prospect of winning $20, and then other students respond by bidding up the price.

Interesting.

Notes

  1. janemarcus reblogged this from whatson and added:
    really interesting, actually.
  2. whatson reblogged this from lfar
  3. radarchive reblogged this from lfar
  4. bruvark reblogged this from lfar and added:
    basic programming skills...on an item. It’s tempting (I need to get ahold
  5. jaimeleigh reblogged this from mattlehrer and added:
    File under “why I don’t use ebay.”
  6. mattlehrer reblogged this from lfar
  7. lfar posted this