economics Politics

Political lobbying is like an all-pay auction

David Zetland teaches Environmental Economics and Policy 100 at UC Berkeley. In this YouTube clip from one of his lectures, he demonstrates how political lobbying is like an all-pay auction (an auction where you pay your bid regardless of whether or not you actually bid the final, highest bid).

[YouTube – Political lobbying explained through the example of all-pay auctions]

A sleazy online auction site, named Swoopo, uses a similar style auction to dupe suckers into creating a “sunk cost” and then extending the time, giving the competition time to recap their own sunk costs. Everyone is a loser in this game, do not play it.—see Metafilter’s writeup.