It's not though. If you stop bidding you don't get the $100 to offset your losses - it's always worth bidding $1 to gain $100 - the position is the same if your current bid is $0 or $1000 - your current bid is a sunk cost.
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Replying to @Tsouperb
The situation is perfectly symmetric - all players face the same incentives. There's no point where not bidding has a better payoff than bidding and a rational player always takes the higher payoff.
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Replying to @Tsouperb
If you're looking for the way out of the dilemma then the answer is to coordinate. Failing that, don't bid at all. But the analogous solutions aren't possible in a competitive marketplace. If you leave expected future gains on the table competitors won't.
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Replying to @Tsouperb
It's too complex to sum up with one game but the heart of it is principle / agent problems and ultimately logo is just 100% wrong about "the capitalists" being in charge. If you wreck google search or Star Wars but gain progressive status as an individual you personally benefit.
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Replying to @CovfefeAnon @Tsouperb
Some of the owners of these places would like to avoid this but any one place that resists gets cut out and destroyed so they all play along knowing that competitors are in the same boat - hope that you don't get sunk any faster. If they could coordinate, they could stop it.
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But merchants don't coordinate as a class - they can't. They all defect on each other constantly - that's the nature of the market and deal making.
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