<\/p>\n
In 1991, I first heard of the idea of auctioning off a $20 note with the special proviso that both the winner and second-place getter must pay for their bids. <\/p>\n
Thirty seconds of thought will tell you that – once you start bidding, you can’t stop. But thirty seconds is far more thought than many people are willing to give before making a bid. Hilarity and profits ensue.<\/p>\n
Professor Max Bazerman<\/a> conducted this experiment<\/a> on his students.<\/p>\n Over the past seven years, Bazerman said, he has conducted about 180 such auctions, and over that period his take has been less than the full $20 only once. Seven times he has cleared $100. <\/p><\/blockquote>\n [Note: This was quote was dated 1994.]<\/p>\n Today, I had a new insight into a way of beating this system – one which might have accounted for him receiving less than $20 on that one occasion.<\/p>\n Remembering that the minimum bid increment is 50 cents, if you have the good fortune of bidding first<\/em>, bid $19.51. No rational person will want to be the second bidder, and pay $20.01 for $20.00. Meanwhile, you are clearing 49 cents of pure profit.<\/p>\n Meanwhile, that raises an accounting puzzle: How do you declare this profit on your tax return? How can you declare a capital gain when there is a purchase date and a cost base, but no sale date?<\/p>\n","protected":false},"excerpt":{"rendered":" In 1991, I first heard of the idea of auctioning off a $20 note with the special proviso that both the winner and second-place getter must pay for their bids. <\/p>\n Today, I had a new insight into a way of beating this system.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_s2mail":"","footnotes":""},"categories":[33,27],"tags":[],"class_list":["post-85","post","type-post","status-publish","format-standard","hentry","category-puzzle-solving","category-thoughts-from-the-shower"],"_links":{"self":[{"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/posts\/85","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/comments?post=85"}],"version-history":[{"count":0,"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/posts\/85\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/media?parent=85"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/categories?post=85"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.somethinkodd.com\/oddthinking\/wp-json\/wp\/v2\/tags?post=85"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}