Public Choice scholars have talked about rent-seeking, and the problem of "Tullock auctions," since the 1970s.
But it is nice to have our wisdom reconfirmed! An interesting example....
All pay auctions (Also called Tullock auctions, of course)
My podcast with Russ Roberts on this bidding problem
4 comments:
I've always heard these things called "dollar" or "Shubik" auctions. I suppose part of the odd appeal of Wikipedia is that everybody can be right.
I remember hearing about the loser-pay auction first from Mungowitz as an undergrad (at NCSU, no less).
I'm striving toward the PhD now, in no small way due to my fantasies of making monstrous profits from naïve undergrads.
No, wait, I want to teach them a lesson. That's it.
To me, this phenomenon seems to be widely known. I wonder how many unwitting participants are needed to get the bid above the value of the bill. I suppose only two, but those two should know something is up when no one else bids.
Jeff, It helps to provide free booze prior to the start of the auction.
Booze is good. I have a feeling 'roids would do the trick, too! :-)
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