The Mathematics of Auctions
from the people-are-not-rational dept
dsg wrote in with this fascinating article about the mathematics of auctions. It's actually a study in one of my favorite economics subjects: the fact that people are not rational. While many economics theories are based on the ideas of people behaving rationally, it's not hard to figure out that almost no one acts rationally all the time. This article shows why people tend to overbid on auctions because they are risk averse. Definitely an interesting read, though, I wish there were some more details in the article about his theories. Thanks to the power of Google, of course, we can also look directly at the researcher's website where he has a number of downloadable papers.
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This illustrates on of the most important lessons
Cool research. I wish I could get paid for stuff like that.
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