In his 1971 paper[i], Martin Shubik described the Dollar Auction game to present a paradox in non-cooperative behaviour and escalation. The rules of the dollar auction game were simple.
- The highest bidder pays his bid amount and wins a 20 $ bill[ii].
- The second-highest bidder also has to pay the amount he bid but gets nothing in return. (Yes. It sucks to be the second-highest bidder)
Technically, a bidder can win the dollar bill by bidding just 1 dollar but that rarely happens. Here’s what typically happens when this game is played in large groups. The bidding starts off with Continue reading Shubik’s Dollar Auction & Cash Burn in Consumer Internet