Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
How a One-Dollar Auction Traps Rational People
In this episode, Lucas and Luna explore the dollar auction — a deceptively simple game designed by economist Martin Shubik that traps rational players into bidding far more than a dollar for a one-dollar bill. Using the real-world example of two software engineers who bid a combined $42 on a $20 bill at a conference, they reveal how competitive escalation, sunk costs, and loss aversion drive people to throw good money after bad. They connect the trap to corporate bidding wars, salary negotiations, and even startup pivots. Listeners learn how to recognize the point of no return — and how to…
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