Why people bid more than a dollar for a dollar: Shubik's escalation trap

Auction a dollar bill with one twist: the second-highest bidder pays their bid too. It sounds harmless, yet in 1971 economist Martin Shubik reported that people playing it at parties often ended up paying a combined $3 to $5 for a single dollar.

Every extra 5 cent bid looks smarter than quitting, until you are both far past $1. Play against a rival who never backs down, and see why the only winning move is to set a limit first.