Harvard Business School professor Max Bazerman was speaking to a conference of 75 Wall Street power-players, guys commanding six-to-seven figure incomes for managing your money.
Max opened by auctioning off a $100 bill. Simple rules: The highest bidder gets the $100 bill. And the second highest pays what he bid, but gets nothing. Forty hands quickly pushed the bidding to $95. Then a couple presumably rational hot-shots, an institutional money manager and a pension-fund trustee, broke the $100 barrier, after which both were guaranteed losers.
Imagine the insanity: Two of America’s financial geniuses caught up in a hotly contested duel, pushing the bids up, up, up … to $465!