Political lobbying explained through the example of all-pay auctions

Blog post with explanation: http://tinyurl.com/y9fuefg . This is from Lecture 18 (http://tinyurl.com/ylf7svt) of my EEP 100 class (http://www.kysq.org/EEP100/).

• Category

  News & Politics

[Carl Teglund]

I have a question tho. Isn't it a democratic right that we actually CAN talk with out politicians and make them change their mind or try to influence them in various ways? What kind of society would we have if we wouldn't be able to communicate with them?

[David Zetland]

Yes, that's a right. The questions are (1) are they listening or just extending the debate and (2) do some have more voice than others?

[VNLAICE96]

Because it is an all pay auction, she would have to pay the 75 cents even though the leading bid was currently a dollar. This would result in losing 75 cents. But by bidding $1.25, she would be the leading bid and win the dollar, resulting in a loss of only 25 cents.

[David Zetland]

Seems you do not know what you're talking about -- esp. when I look at your promo vid for your lobbying services...

[goldenRuler]

nice trolling ;)

[takeadayofff]

If u aren't a VIP then u can't talk to the feds. The role of their staff is to filter through only the messages from rich VIPs. Everyone else gets a form response full of generic BS.

[David Zetland]

Any time!

[David Zetland]

They can be the same...

[Dem0nz890]

great class, I guess a sort of take away is some of these people invest so much that to see themselves lose they can minimize loss by putting up a bit more to get what they want

[Gerald Mendoza]

awesome example, haha

[hotbeefo]

It's great and like he says the only way to win to to not play. What I'm surprised about is that they continue to bid a few more times after he makes it clear what's going on.

[AntiTroll101]

Because then someone will bid higher, claim the dollar, and lose less money, whereas you, having bid lower, won't get anything. If you want that dollar, no matter the cost, it would be wise to bid the very last, and thus the very highest. Bidding $0.10 for the dollar wouldn't accomplish anything; you'd be at the bottom of the bid-barrel.