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The self-destructing auction

https://www.theverge.com/2018/10/7/17947744/banksy-ballon-girl-artwork-self-destructed-sothbys

Last year, one of Banksy’s most famous pieces of artwork was being auctioned off. TheĀ Girl with Balloon sold for a whopping $1,4 million. The moment it was sold to the highest bidder however, the art magically began to shred. This of course rendered the art worthless. This kind of auction is unbeknownst to any type we have learned in Networks, as strategy just goes out the window.

For a “self-destructing” auction, your revenue is always negative as the item will be worthless by the end of the auction. In this case of the Banksy’s auction, no one had any idea that the art would self-destruct, so people have bid what they have normally bid, all for the payoff to be negative.

The dominant strategy in this case would be to bid as low as possible in order to decrease your negative payoff. The problem is that there is no sign that an auction would be self-destructing, so in that case there doesn’t exist a good strategy for these types of auctions.

A self-destructing auction is an enigma to all other types of auctions, as strategy doesn’t matter as if you win the auction, you are indeed the sole loser of the auction.

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