This is a thought experiment, not a real offer. If someone offers to sell you a $100 dollar bill for $5, you’d take that deal instantly, right? Of course! But suddenly your friend jumps in and offers $10 for the $100 and now you’re in a bidding war. Here’s the catch: the seller says that the losing bidder has to pay him their unsuccessful bid. So, the bids escalate. $20! $50! $100 for a $100 bill -- and now you and your friend are both in trouble. Martin Shubik’s Dollar Auction Game shows us that escalation based on rational decision-making can lead to disastrous results and trick you into playing a game you can never win… and it happens in real life way more often than we realize. ** LINKS ** Get Vsauce's favorite science and math toys delivered to your door! null 2018 Currency Budget https://www.federalreserve.gov/foia/files/2018currency.pdf The Fed - How Much Does It Cost To Produce Currency And Coin? https://www.federalreserve.gov/faqs/currency_12771.htm New $100 Bill Costs 60% More To Produce (Article from 2013) https://www.marketwatch.com/story/new-100-bill-costs-60-more-to-produce-2013-10-08 Prop Movie Money https://propmoviemoney.com/product/new-style-100-full-print-prop-money-stack/ Hasbro Monopoly Money https://www.amazon.com/dp/B00000IWCW/ Tullock Auctions https://blogs.cornell.edu/info2040/2012/09/25/losing-to-win-tullock-auctions/ Knee-Deep In The Big Muddy: A Study Of Escalating Commitment to a Chosen Course of Action http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.470.3668&rep=rep1&type=pdf The Dollar Auction Game: A Paradox in Noncooperative Behavior and Escalation by Martin Shubik http://www.math.toronto.edu/mpugh/Teaching/Sci199_03/dollar_auction_1.pdf Backward Induction https://vknight.org/Year_3_game_theory_course/Content/Chapter_07-Extensive_form_games_and_backwards_induction/ *********************************** Vsauce2 Links Twitter: https://twitter.com/VsauceTwo Facebook: https://www.facebook.com/VsauceTwo Hosted, Produced, And Edited by Kevin Lieber Instagram: http://instagram.com/kevlieber Twitter: https://twitter.com/kevinlieber Website: http://kevinlieber.com/ Research And Writing by Matthew Tabor https://twitter.com/matthewktabor VFX By Eric Langlay null Huge Thanks Paula Lieber https://www.etsy.com/shop/Craftality Select Music By Jake Chudnow: null