COMMERCE 1BA3 Lecture Notes - Lecture 12: Gary Johns, Dan Ariely, Satisficing
2 Mar 2018
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Commerce 1ba3 - lecture 12 decision making 1. Is based on a game where there is an auction between 2 people for a bill. Both auctioneers will put in their first bid. After this, it seems irrational for them to stop there and not bid up the price. Ex. if auctioneer b" bids up to 92 cents from a""s 90 cent bid, a" can bid up to. 94 cents only losing 2 extra cents or, if a" drops out of the auction they"ll have to pay out their 90 cents. After this, if a" bids up again, b" is left in a similar situation. The winner receives the bill while the other participant must pay the price of their last bid. This bidding process would theoretically continue since both players don"t want to lose. The behavior of the auctioneers that seems rational at the time, could lead to an undesirable consequence.
