As he contemplates trudging off into the Big Muddy, Afghanistan style, Obama might profit from perusing this article in today’s Times:
If a business school professor is running short on cash, there is a sure-fire solution: run a dollar auction game in class.
To start, the professor offers to sell the class a $20 bill. Bidding starts at $1 and goes up in $1 increments. The winner pays the professor whatever the high bid was, and gets the $20. Here’s the catch: the second-highest bidder also has to pay, but gets nothing in return.
Typically, a few brave or stupid students — nearly always male — open the bidding but fairly quickly only two bidders remain and they discover they are in a war of attrition. The bidding slows when someone bids $20, but then resumes with neither wanting to “lose.” If the two students are particularly stubborn, prices can go over $50. (The professor typically gives the money to charity, or claims to.)
The dollar auction game was invented by a pioneer of game theory, Martin Shubik of Yale, and it illustrates the concept of “escalation of commitment.” Once people are trapped into playing, they have a hard time stopping. (Consider Vietnam.) The higher the bidding goes, and the more each bidder has invested, the harder it is to say “uncle.” The best advice you can give anyone invited to play this particular game is to decline.
Further proof that markets are not rational, and neither are governments. Obama should say “uncle” and he should defend his decision vigorously. If he leaves, he’ll be attacked by the right, as always, but the obvious retort is to ask why American men and women should die to prop up a corrupt regime.
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