The $20 auction and the dynamics of conflict

This amazing story [sorry link broken and i can’t find it any more] explains why I often simply drop a topic when the discussion starts getting too hot. You can always take up the subject up later if need be.

20-conflictThe Dollar Auction first appeared in 1971. Today, given inflation, the game is often played like this: A large group of people participate in the auction, say between 30 and 50. A $20 bill is auctioned off to the highest bidder. Bidding begins at $1. All subsequent bids must be in single dollar increments. The “twist” to this auction is that while the highest bidder wins the twenty dollar bill, the second highest bidder must pay to the auctioneer what he or she bid as well. In this auction, there will usually be not only be one loser, one who pays money for nothing, and but two. Read on!

By the time the auction reaches $19, most bidders drop out. The person who had bid $18 will invariably bid $20 to break even. Presumably, that would bring the auction to a close, right? Wrong! One professor who utilized the Dollar Auction as a teaching tool for more than 20 years said that the bidding will usually continue well past the $20 mark.

Consider this case in point, a day the professor will never forget.  He used the dollar auction while teaching a course for executives in organizational behavior. At the end, the “winner” paid $54 for the twenty dollar bill. The loser paid $53. The rest of the class watched the futile bidding war with bewilderment and glee. (Proceeds would be donated to charity).

Things Heat Up

And two guys bid thousands: “My ego took over and my competitive juices began to flow.”  “I was more concerned with ‘winning’ and ‘not giving up.’” Clearly, there came a point in the auction when the money was no longer the issue. The focus became the other person. The new concern was a very strong desire not to be beaten by one’s adversary and lose face in front of others. When that occurred, irrationality set in and the auction spun out of control. ]

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5 thoughts on “The $20 auction and the dynamics of conflict

  1. Rombo says:

    Very interesting! Thanks for sharing. Ohmygoodness.

  2. Ben says:

    It’s crazy, I know. I couldn’t help thinking how often we do our own little versions of the $20 auction – the things we fight over, and the ways we fight about them.

    It also got me thinking about one particularly huge (and immensely tragic)version of a lose-lose auction we all witnessed and experienced. I have to say I have a special appreciation for a certain mediator.

  3. Rombo says:

    That’s exactly where my mind went too! And then I turned the mirror on myself and wondered… Ah, but with this story in my head, I don’t think I’ll have trouble not going there again, ever.

    You’re about to bid us adieu, no? All the best with the thesis.

  4. Suly says:

    Another clear sign of the failure of mathematics education in America..

  5. Mike says:

    The $20 auction is interesting. I would present the idea that the last 2 bidders split the cost of the bid and split the $20 “prize” to avoid an over-inflated final bid.

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