Here’s a little eye opener to try out next time you've got a crowd. Auction off a $20 bill, the opening bid, a dollar, with bids climbing in one-dollar increments. It’s winner takes all, but there’s a catch. Both the winner and first runner up have to pay.
This won’t end well if it ends at all. Everyone will drop out but two bidders who continue outbidding each other, neither willing to surrender and become the runner up who gets nothing but still pays. They’ll overpay for that twenty which seems irrational but isn’t entirely. After all, you would bid that first dollar, right? And once you’re in, you think, “bid still another to win rather than get nothing? Sure. That’s worth it.”
This winner-takes-all-loser-still-pays auction opens eyes to something fundamental about evolution, competition and especially modern life. Today millions invest in careers where few succeed—all those also-rans in debt for educations in fields they couldn’t enter. Many are called; few are chosen, but all the called still have to pay.