A Game You Can Never Win

This is a thought experiment, not a real offer. If someone offers to sell you a $100 dollar bill for $5, you’d take that deal instantly, right? Of course! But suddenly your friend jumps in and offers $10 for the $100 and now you’re in a bidding war.

Here’s the catch: the seller says that the losing bidder has to pay him their unsuccessful bid. So, the bids escalate. $20! $50! $100 for a $100 bill -- and now you and your friend are both in trouble.

Martin Shubik’s Dollar Auction Game shows us that escalation based on rational decision-making can lead to disastrous results and trick you into playing a game you can never win… and it happens in real life way more often than we realize.

*** LINKS ***

Get Vsauce's favorite science and math toys delivered to your door!

2018 Currency Budget

The Fed - How Much Does It Cost To Produce Currency And Coin?

New $100 Bill Costs 60% More To Produce (Article from 2013)

Prop Movie Money

Hasbro Monopoly Money

Tullock Auctions

Knee-Deep In The Big Muddy: A Study Of Escalating Commitment to a Chosen Course of Action

The Dollar Auction Game: A Paradox in Noncooperative Behavior and Escalation by Martin Shubik

Backward Induction

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Vsauce2 Links

Hosted, Produced, And Edited by Kevin Lieber

Research And Writing by Matthew Tabor

VFX By Eric Langlay

Huge Thanks Paula Lieber

[Vsauce]

HI THERE, YOU. I took the summer off to write a book. I was able to get 10 chapters finished, looked at the calendar, and realized it was time to get back to you. So I'm back. Hello. I will work on the book during weekends until it's finished. For now, expect more videos, more frequently. And as always... thanks for commenting.

[jantrojnar]

1: bid 10$
2: tell your friend not to bid
3: split the won 100$ in half

[lisamarie]

Kevin: hey! Want $100 for just $1?
Billy: I’ll give you $5!
Me: * knocks Billy out *

[xtremelamborghini]

Title:”the game you can’t win”
Me after watching the video: I can I just have to be the one selling the 100$

[lililllililiiiilli]

Me: $99 on my first bid
Billy: has no reason to place a bid
Me: wins $1

[brian]

Just keep bidding forever. He'll never collect his profit because game is still in play.

[oswaldosanchez]

Bold of you to assume I can bid over $20

[slaayerplaayer]

Friend: hey 1 dollar for 100

Me: ok

Billy: I got 5 dollars

Me: let’s just split it

Billy: ok

Friend: wait no

[sarahshirts]

Just get your two most competitive friends and your set.

[rano]

*Lol I did this with my friends but they took my $100 and beat me up lol it was awesome*

[sneakysquirrel]

they bid a $1.00 i bid $2.00 and agree to split the difference. we both walk away with $48.50 and the seller gets $3.00 isn't that a win?

[ignitesyou]

I did this with my friends and earned $74.45


thanks vsauce

[Taikamuna]

1:37 jokes on you, I don't have friends

[brandond.]

Just tell the other person to stop bidding and you can split the $100

[shotokhan]

if billy is your friend agree to split it 51-49


if billy bids $2, you don't talk to billy anymore

[Skwertydogs]

"The only winning move is not to play" - Joshua

[legionslaughter]

I didn’t bid anything. Stop making fake accusations.

[adamvale]

How to win the game.

Immediately bid $99.99 before the other person has a chance to make a bid.

The other bidder doesn’t yet hold a commitment to the bid, and thus has no incentive to outbid you.

[Nexxarian]

Who would ever partake in an auction where you pay your losing bid? Tf?

[AsianSensationist]

I remember doing this game in a college economics class. The professor ended up selling his $5 bill for like $10.