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Dollar auction, the Glossary

Index Dollar auction

The dollar auction is a non-zero sum sequential game explored by economist Martin Shubik to illustrate how a short-sighted approach to rational choice can lead to decisions that are, in the long-run, irrational.[1]

Table of Contents

  1. 14 relations: All-pay auction, Auction, Bidding fee auction, Binomial distribution, Economist, Escalation of commitment, Greedy algorithm, Martin Shubik, Sequential game, Sunk cost, Tragedy of the commons, United States one-dollar bill, War of attrition (game), Zero-sum game.

  2. All-pay auction
  3. Paradoxes in economics
  4. Social science experiments

All-pay auction

In economics and game theory, an all-pay auction is an auction in which every bidder must pay regardless of whether they win the prize, which is awarded to the highest bidder as in a conventional auction.

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Auction

An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder.

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Bidding fee auction

A bidding fee auction, also called a penny auction, is a type of all-pay auction in which all participants must pay a non-refundable fee to place each small incremental bid. Dollar auction and bidding fee auction are all-pay auction.

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Binomial distribution

In probability theory and statistics, the binomial distribution with parameters and is the discrete probability distribution of the number of successes in a sequence of independent experiments, each asking a yes–no question, and each with its own Boolean-valued outcome: success (with probability) or failure (with probability).

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Economist

An economist is a professional and practitioner in the social science discipline of economics.

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Escalation of commitment

Escalation of commitment is a human behavior pattern in which an individual or group facing increasingly negative outcomes from a decision, action, or investment nevertheless continue the behavior instead of altering course.

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Greedy algorithm

A greedy algorithm is any algorithm that follows the problem-solving heuristic of making the locally optimal choice at each stage.

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Martin Shubik

Martin Shubik (1926-2018) was an American mathematical economist who specialized in game theory, defense analysis, and the theory of money.

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Sequential game

In game theory, a sequential game is a game where one player chooses their action before the others choose theirs.

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Sunk cost

In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered.

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Tragedy of the commons

The tragedy of the commons is the concept which states that if many people enjoy unfettered access to a finite, valuable resource such as a pasture, they will tend to overuse it and may end up destroying its value altogether.

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United States one-dollar bill

The United States one-dollar bill (US$1), sometimes referred to as a single, has been the lowest value denomination of United States paper currency since the discontinuation of U.S. fractional currency notes in 1876.

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War of attrition (game)

In game theory, the war of attrition is a dynamic timing game in which players choose a time to stop, and fundamentally trade off the strategic gains from outlasting other players and the real costs expended with the passage of time.

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Zero-sum game

Zero-sum game is a mathematical representation in game theory and economic theory of a situation that involves two competing entities, where the result is an advantage for one side and an equivalent loss for the other.

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See also

All-pay auction

Paradoxes in economics

References

[1] https://en.wikipedia.org/wiki/Dollar_auction

Also known as Bid for a dollar, Dollar bill auction.