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How to Auction off an Ordinary Twenty Dollar Bill for Fun and Profit

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How to Auction off an Ordinary Twenty Dollar Bill
for Fun and Profit

twentyDollarAuction_logoIt’s June 2009 and in the Midwest of the United States where this blog is being written it’s time for patio parties, picnic’s, pool parties, barbecues, and a lot of other outdoor activities.

If you have a nice friendly neighborhood party on the deck or patio with a fire pit going, you might want to try this… well… sort of… party game

It’s really not a game at all – it’s some serious business as you will discover.   You could make some money, get entertained, and learn something about human behavior all at the same time.  What a deal.

Auction off a twenty dollar bill

twentyDollarAuction_logoPit

Why not auction off a twenty dollar bill at your party?

Pull a twenty dollar bill out of your pocket.

Auction it off  according to these simple rules

  1. Bids are in one dollar increments
  2. Highest bidder wins
  3. The second-place bidder has to pay his/her bid and get nothing.

“You can observe a lot by watching ” – Yogi Berra

twentyDollarAuction_logoTableThis is no ordinary auction.  I am not going to tell you what might happen.  It is highly likely that you are going to make a profit on this auction.

This is really a game of strategy, negotiation, commitment, and loss aversion.

Give it a try.  What you learn from observing the behavior during this auction is going to give you some insight into the thinking and behavior of your friends and neighbors that you probably could not get any other way.

Warning – you might see some very bizarre behavior during this auction.

Think through what might happen.  At the time of this writing, the highest documented bid for an ordinary twenty dollar bill was $204.

What can you learn from this acution?  Stay tuned for an upcoming posting on this site and watch how it can be applied to organizational behavior.  Best if you try this acution for yourself in advance – before we post the analysis and how it can be observed in an organizational context.

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Written by frrl

June 14, 2009 at 4:45 am

Posted in Commentary and Opinion

Tagged with ,

One Response

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  1. Oh, yes!
    I remember a lecture in grad school (MBA) where we did this. It’s much more tangible to actually DO the auction than to just talk about it, and shocking how the behavior works.

    I think this auction model (and I don’t know it’s official name…) relates to how much time someone spends on hold, say, when calling Tech Support.

    Initially, I’m holding because the value of what I get (fixed computer, cable, etc.) is more valuable than my time spent.

    After a while, it becomes: “Shall I hold on ONE MORE MINUTE, or hang up…” Here’s where the loss aversion: comes in – I’ve invested ‘n’ minutes. If I hang up, I’ve ‘paid’ the time, but the next guy in queue behind me gets the tech support.

    Great posting.

    Mike Y
    KM5Z
    Dallas, Texas

    Mike Y

    June 17, 2009 at 9:48 pm


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