Dollar auction

Dollar auction

The dollar auction is a non-zero sum sequential game designed by economist Martin Shubik to illustrate a paradox brought about by traditional rational choice theory in which players with perfect information in the game are compelled to make an ultimately irrational decision based completely on a sequence of rational choices made throughout the game.[1]

Contents

Setup

The setup involves an auctioneer who volunteers to auction off a dollar bill with the following rule: the dollar goes to the highest bidder, who pays the amount he bids. The second-highest bidder also must pay the highest amount that he bid, but gets nothing in return. Suppose that the game begins with one of the players bidding 1 cent, hoping to make a 99 cent profit. He will quickly be outbid by another player bidding 2 cents, as a 98 cent profit is still desirable. Similarly, another bidder may bid 3 cents, making a 97 cent profit. Alternatively, the first bidder may attempt to convert their loss of 1 cent into a gain of 96 cents by bidding 4 cents. In this way, a series of bids is maintained. However, a problem becomes evident as soon as the bidding reaches 99 cents. Supposing that the other player had bid 98 cents, they now have the choice of losing the 98 cents or bidding a dollar even, which would make their profit zero. After that, the original player has a choice of either losing 99 cents or bidding $1.01, and only losing one cent. After this point the two players continue to bid the value up well beyond the dollar, and neither stands to profit.

See also

References

  1. ^ Shubik, Martin (1971). "The Dollar Auction Game: A Paradox in Noncooperative Behavior and Escalation". Journal of Conflict Resolution 15 (1): 109–111. doi:10.1177/002200277101500111. 

Further reading

  • Poundstone, William (1993). "The Dollar Auction". Prisoner's Dilemma: John Von Neumann, Game Theory, and the Puzzle of the Bomb. New York: Oxford University Press. ISBN 019286162X. 

Wikimedia Foundation. 2010.

См. также в других словарях:

  • Dollar Auction — The basic dollar auction is based on the auction of a $1 bill between two individuals. A dollar auction is a non zero sum game, which, like the prisoner s dilemma, reveals that rational behavior can often lead to an undesirable consequence. The… …   Investment dictionary

  • Auction — Auctioneer redirects here. For the DC Comics supervillain, see Auctioneer (comics). An auctioneer and her assistants scan the crowd for bidders. An auction is a process of buying and selling goods or services by offering them up for bid, taking… …   Wikipedia

  • Dollar-Auktion — US Dollar Banknote Die Dollarauktion, auch allgemein Eskalationsauktion genannt, ist ein von Martin Shubik entwickeltes Spiel, dass durch sein Spielprinzip die Teilnehmer irrational handeln lässt, obwohl sie eigentlich alle notwendigen… …   Deutsch Wikipedia

  • Auction Rate Securities — sind ein Finanzierungsinstrument, welches in der Regel von Unternehmen oder Kommunen in den USA genutzt wird. Es handelt sich dabei um langlaufende (meist 20 bis 30 Jahre) Anleihen mit variablen (nach oben begrenztem) Zinssatz. Die Höhe dieses… …   Deutsch Wikipedia

  • Dollar coin (United States) — Dollar United States Value 1.00 U.S. dollar Mass  8.100 g  (0.260 troy oz) Diameter  26.5 mm  (1.043 in) Thickness   …   Wikipedia

  • Auction chant — is a rhythmic repetition of numbers and filler words spoken by an auctioneer in the process of conducting an auction. The auction chant is a repetition of two numbers at a time which indicate the monetary amount involved with the sale of an item …   Wikipedia

  • Dollar Bank — Type Mutual Society Industry Financial Services Founded 1855 Headquart …   Wikipedia

  • Auction Network — is a 24 hour [ [http://www.variety.com/article/VR1117968771.html?categoryid=14 cs=1] ] Internet and cable television channel that allows viewers to participate remotely in auctions taking place throughout the world. Viewers become “virtual… …   Wikipedia

  • Dollar (United States coin) — Infobox Coin Country = United States Denomination = Dollar Value = 1 Unit = U.S. dollar Mass troy oz = 0.260 Mass = 8.100 Diameter inch = 1.043 Diameter = 26.5 Thickness inch = 0.079 Thickness = 2.00 Edge = Plain w/ incused inscriptions… …   Wikipedia

  • dollar — /ˈdɒlə / (say doluh) noun 1. the principal monetary unit of Australia, divided into 100 cents. Symbol: $ Abbrev.: AUD 2. the principal monetary unit of various other countries, as in the US, Canada, Hong Kong, Singapore, Brunei, some countries of …   Australian-English dictionary


Поделиться ссылкой на выделенное

Прямая ссылка:
Нажмите правой клавишей мыши и выберите «Копировать ссылку»