This showed up in my Awasu today and talked about some things I hadn't really thought much about before.
Psychologist Max Bazerman says that during the past ten years he has earned more than $17,000 by auctioning $20 bills to his MBA students at Northwestern University. In the course of almost two hundred of his actions, the top two bids never totaled less than $39, and in one instance totaled $407.
How does such a thing happen?!
It's sometimes referred to as the winner's curse and the phrase popped up quite a bit during the Google auction IPO But this kind of thing is prevelant in many aspects of the things we do, basically anytime we're competing with others for some resource: a house for sale, a job, world domination (seriously! How much money did the US and USSR sink into the arms race?).
The best linked-to article is this one:
What does it all mean? It means that there are other forces driving human negotiation - an auction is a classic negotiation - than reason.
This auction is driven first by greed, then by fear, and finally by a kind of suicidal vengefulness.
Why are people so weird?