Dollar Auction

It was proposed by economist economist Martin
Shubik. It illustrates a paradox brought about by traditional
rational choice
theory in which players with perfect
information in the game are compelled to make an ultimately irrational
decision based completely on a sequence of rational choices made throughout the
game.
Dollar auction is an all pay
auction having two player. The auction is for a dollar bill.
The game begins with one of the players bidding 1 cent, hoping to
make a 99 cent profit. The second player will quickly bid 2cents, as a 98 cent profit is
still desirable. Again,first bidder bids 3 cents,converting his loss of 1 cent into a
gain of 97 cents. In this way, a series of bids is maintained. However, a problem
becomes visible the moment bidding reaches 99 cents. Supposing that the other player had
bid 98 cents, he now has the choice of losing the 98 cents or bidding a dollar even,
which would make his profit zero. After that, the first player has a
choice of either losing 99 cents or bidding $1.01, and only losing one cent. After this
point the two players continue to bid the value up well beyond the dollar, and neither
stands to profit.The game actually has no equilibrium,
as two rational players in this game could theoretically lose all of their money to the
auctioneer. Both players stand to lose money, but the winning bidder loses about 99
cents less than the losing bidder.
To end the bidding war a bidder
can bid 99 cents more than the previous bid, leaving no bid that offers a potentially
higher profit (or smaller loss). (For example, Bidder 1 bids $x, Bidder 2 bids $x +
$0.99. If Bidder 1 were to bid $x + $0.99 + $0.01, he would be bidding to pay $x + $0.99
+ $0.01 for a prize of $1, or a total loss of $x-- the same as if he had not increased
his previous bid.) As a special case of this, if the first bidder immediately bids
$0.99, he will not be outbid by the other bidder, who has no potential to make a profit.
The first bidder will earn $0.01 in profit and the second bidder will pay nothing and
win nothing.

The Resaon Communism Failed : II

10. Due to limited amount of resources, the is always a struggle to
get it and Someone will always get greedy enough for sharing it.(Thanks to
lupin)
11. Men have an affinity for their friends, family, acquaintance
than for a stranger, that makes commuism in a state to deviate to oligarchism.
12. Monetary Currency
13. Weapon Race
14.
Conspiracy from non-communist Capitalist Nations
15. It thinks highly
of wisdom of
crowd but not that highly of madness
of crowd
16. Reluctance of government to move toward pure
communism (statelessness)
17. Surplus
Value still exists thought the state is communist for cheap
labour.
18. Commodity
Fetishism remains in the mind of ruling body.

The Resaon Communism Failed

1. State is run by politicians, not by economists.
2. Leaders confuse the final state of communism(statelessness) with anarchy(not
in philosophical sense).
3. Capitalist think they may lose market if
communism grows.
4. People prefer short term benefit over a long term
benefit.
5. Party rules, commune doesn't.
6.
Proletariat don't get access to capital
anyway.
7. The country embracing communism were poor.
8. Communist ideology always argues for the freedom of a person to think and
express in his ways but countries embracing communism never follow that.
9.Communist theory assumes that all humans are basically good, well motivated,
and possess equal capabilities and motivation.

To
be Continued...