Here is an idea for a party game. Laszlo Mero[1] reports
on a game that has proven profitable for the person that conducts the
game. That person is called the
auctioneer and he/she puts up a dollar and announces to the group – usually it
works with a healthy number of people – that the dollar is up for auction. Generally, bids for the dollar must be at
least one cent, but it is recommended that bids be at least made in ten cent
increments. So, potentially, for a penny
or a dime someone can “buy” a dollar.
This game was
introduced by Martin Shubik and it has been played at social gatherings, but
also in psych labs. And if the dollar
was bought for a dime, twenty cents, or so, not much would be noted. That sounds rational. But the astonishing fact is that Shubik, as
the auctioneer, has averaged a selling price of $3.40. One time he made twenty dollars. Why? Well, the above leaves out another rule to
the game. Not only does the winning bidder
have to pay the amount he/she bid, but also the person who bid the prior – next
highest – bid must pay.
So, if one
bids sixty-cents and the prior bid was fifty-cents, and no more bids are made,
both the sixty-cent, winning bid and the fifty-cent bid is paid to auctioneer. Mero describes the psychology as the bidding
goes higher. This writer is reminded of
the saying: in for a penny, in for a
pound. At the beginning it seems that purely
rational thinking goes on. For example,
“I can get that dollar for a twenty-cent bid; that’s an eighty-cent profit.” But as the bidding goes higher, irrational
thinking becomes more prevalent.
If the bidding
is at two dollars, and the next allowable bid is at least $2.10, the person who
made the previous bid, of $1.90, if he/she does not make the potentially winning
bid, he/she will lose $1.90. For most
people that would not be the end of world – chalk it up to experience and the
entertainment value of the game. But
there is more going on; how will the person be viewed by the other participants
for “losing” the game or the money?
“Pride goeth before the fall” – yet
another saying. But this little game
tells one something about much more important historical events or
developments. Next posting will describe
this quizzical phenomenon a bit more. It
turns out, that the game has something to say about how the nation fell into
the Vietnam War nightmare.
[1] Laszlo
Mero, Moral
Calculations: Game Theory, Logic, and
Human Frailty (Springer-Verlag, NY:
Copernicus, 1998).
