Chapter 347 (2/2)
”One dollar auction trap?” Li Tao shook his head and said, ”I'm ignorant. I've never heard of it.”
Yang Xiaotian said: ”this is a topic of game theory that I heard when I was in MIT class, that is, the case of auctioning one dollar for 66 dollars.”
”One dollar auction trap is a classic” one dollar auction ”case designed by famous game theory expert and Yale University Professor M. Shubik.”
”Here's the case: an auctioneer offered a dollar for auction, and the bidders bid five cents at a time. If you can get this one dollar at an auction below 100 cents, you'll make a profit. But this auction has a different rule: ”as long as you bid, even if you don't succeed in bidding, you have to pay the auctioneer the price you shout.”
”The auction started, and a group of people started bidding, five cents, ten cents, 15 cents, 20 cents, so the price kept shouting up, and when it was 50 cents, most people stopped bidding. At this time, their respective losses are under 50 cents. ”
”But there are still a few people who continue to bid. In the end, there are only two people left, Peter and mark. When Peter asked for 95 cents, mark didn't hesitate to ask for 100 cents. 100 cents is a dollar. At this time, even if Mark takes a dollar, it is equal to one dollar for one dollar. He has no profit at all. ”
”However, Peter's bid is 95 cents. If Peter can't bid successfully, he will lose 95 cents, so Peter can't ride the tiger and bid 105 cents. If it's 105 cents, Peter has lost, but it's less than not bidding. If it's 95 cents to give up, he will lose 95 cents. If it's 105 cents, he will lose only 5 cents. ”
”But mark realized something. He called out the price of 205 cents and looked directly at Peter, hoping to double his offer to scare him off. Peter was scared off, so mark took the dollar for 205 cents and lost 105 cents. Peter asked for 105 cents and lost 105 cents. Two people are stop loss in time, but also lost, the other people were losing 5-70 cents. Finally, the auctioneer collected the money, and he got a total of 66 dollars with the dollar, making a net profit of 65 dollars. ”
”Do you know why?”
Yang Xiaotian said the case, and everyone listened attentively and thought about it. Finally, Yang Xiaotian looks at Li Tao, smiles and begins to ask Li Tao.
”I've heard of the word” sunk cost ”. The reason why they owe the auction is that they are afraid of losing money.” Li Tao thought about it and said. He is not a fool. Although he has never studied game theory, it is not difficult to understand the cases of game theory.
Yang Xiaotian showed a ”teachable” expression, nodded and said: ”yes, the one dollar auction trap is that people can't bear the sunk cost. They can only continuously increase their investment and expect stop loss, but the result is deeper and deeper. It's just like many wives who meet slag man, but still pay for slag man without complaint and regret. It's not that they are cheap or stupid, but that they have paid a series of costs on slag man, such as youth, physical relationship, money, emotion, fertility, etc. They don't want to lose all their efforts, so they have to invest more, hoping that the scum man can turn back. ”