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I played an identical game a few years ago. Someone went ahead and bid $100 for the $20. Models work fine as long as "rational" behavior is a worthwhile assumpt
by adatta02 17y ago
I played an identical game a few years ago. Someone went ahead and bid $100 for the $20. Models work fine as long as "rational" behavior is a worthwhile assumption.
- cwan 17y agoRecent studies in behavioural economics (and also the winner of the Nobel in Economics a few years ago) suggest that rational isn't a necessary precondition - you just need some players who are rational/have knowledge. Sure it causes short term fluctuations but in the long run, you get to the same answer/price.
- scott_s 17y agoWas payout enforced? If they don't pay up, then the bidding could easily continue.