Step 1: To explore the effects of competition on decision making. instructor will inform you whether this money is real or imaginary). All members of the class may participate in the auction at the same time.  The rules for this auction are slightly different from those of a normal auction. In this version, both the highest bidder and the next highest bidder will play their last bids even though the dollar is awarded only to the highest bidder. For example, if Bidder A bids 15 cents for the dollar and Bidder B bids 10 cents, and there is no further bidding, then A pays 15 cents for the dollar and receives the dollar, while B pays 10 cents and receives nothing. The auctioneer will lose 75 cents on the dollar just sold. Bids must be made in multiples of 5 cents. The dollar will be sold when there is no further bidding. If two individuals bid the same amount at the same time, ties are resolved in favor of the bidder located physically closest to the auctioneer. During each round, there is to be no talking except for making bids.

Step 2: 15 Minutes. The instructor (auctioneer) will auction off five individual dollars to the class. Any student may bid in an effort to win the dollar. A record sheet of the bidding and winners can be kept in the worksheet that follows.

1. Who made the most money in this exercise—one of the bidders or the auctioneer? Why?

2. As the auction proceeded, did bidders become more competitive or more cooperative? Why?

3. Did two bidders ever pay more for the money being auctioned than the value of the money itself? Explain how and why this happened.

4. Did you become involved in the bidding? Why?

a. If you became involved, what were your motivations? Did you accomplish your objectives?

b. If not, why didn’t you become involved? What did you think were the goals and objectives of those who did become involved?

5. Did people say things to one another during the bidding to influence their actions? What was said, and how was it influential?