# How to spoil a party.

Suggest the following game to the host:

Have a friend donate a \$1 bill and place it on the table.  There are two general rules.

1. The dollar bill is awarded to the highest bidder.  Whatever the highest bid is, that bidder pays for the dollar with that bid.  Each bid must be higher than the last and the game ends when there are no new bids.
2. The second-highest bidder has to pay his last bid, but gets nothing.

It’s easy to imagine how the game plays out. The first bids are pennies, but it slowly rises to bids of \$1.00 and \$0.99.  Now, the second-highest bidder is now paying \$0.99 for nothing, when he can just bid \$1.01 and only lose a penny!  Etcetera, Etcetera, Etcetera… Soon, friends are no longer friends.

Is there a rational way to play this game? This question is the premise of game theory and is the theme of William Poundstone’s Prisoner’s Dilemma.  I won’t describe the prisoner’s dilemma here, but I did appreciate the description and critiques of game

theory from this book. Poundstone develops the “why” behind people’s motivation to cooperate or defect.  He also presents a brief history of John von Neumann and his contribution to game theory.

A good follow-on to this book seems to be Liars and Outliers by Bruce Schneier, which explores how society relies on trust to function, even when there are defectors, to use game theory parlance.  For example, when we board the plane, we trust that pilot knows how to fly.

However, I’m going back to fiction for the moment and I’m going to read the Girl who kicked the Hornet’s Nest.  I’ve read the previous two books some time ago, but I have this thing against finishing a series…

## 3 thoughts on “How to spoil a party.”

1. Jason says:

My professor in my negotiations class used to play that game with her class. She had a jar of money and asked the class to bid on it. The jar might have had \$50 in it but the last time she did it, it got down to 2 guys (naturally) who would not give up and was bidding up to \$300 and ended up STILL going at it in her office. She put a stop to that game after that. It was a funny story. It’s an evil evil game.

2. Grant says:

The only rational response to this game is to never play it.

1. That was one of the author’s points: avoid prisoner’s dilemmas! But then where is the fun! http://xkcd.com/601/