What is a dollar auction?
The dollar auction is the name of a non -zero sequential game designed to illustrate phenomena, where players ultimately make an irrational decision based on rational choice. The game begins when the auctioneer offers a auction to sell $ 1 at the US dollar (USD) with two provisions: each offer must be higher than the previous and the second highest applicant must also pay his offer. If the winning offer is $ 0.99 and the losing offer is $ 0.98, both applicants pay the relevant offers. The dollar auction could start with $ 0.01 and $ 0.02 USD, but because offers almost $ 1 USD, the focus will be shifted. If the high offer is $ 1 or more, the second highest applicant may increase the offer to minimize loss. If this candidate wins, he will have $ 1 USD to help balance the offer. The actual game can have participants of $ 3 or more for one doll Bill.
was designed by Martin SHUBIK, who in 1971 POPSAl in the article, it was his attempt to find out whether addiction could be introduced into the theory of games. The game theory is a set of concepts that describe strategic interaction between the parties to achieve winning results or profit. It is widely used in the field of microeconomics. Zero -sum game is a place where profits and losses are equal to zero, for example, when one side gets 10 and the other side loses 10.
The paradox in the dollar auction is that each candidate counts to gain an advantage, but the candidates are increasingly losing auction. It is comparable to the auction of all paid, which, as the name suggests, is paid by all candidates. An example of this is political lobbying, where all lobbyists pay costs, and just as the dollar auction will be a clear "winner" only one.
in a larger AA more insidious example, the principle of dollar auction was applied to what is referred to as the war on wear. The aim in the wear war is not to win a battle or a decisive victory, but systematically cause the greatest cost of workingstrength and resources on the opponent. The parallel is obvious because the candidate with the largest amount of cash will be able to take advantage of reserves. Both lose money, but the winner, who exceeds the offer of defeated by a minimum amount, loses almost almost a dollar than the second highest applicant.