Noun
dollar auction (plural dollar auctions)
(game theory) A non-zero-sum sequential game designed to illustrate a paradox brought about by traditional rational-choice theory in which players are compelled to make an ultimately irrational decision based entirely on a sequence of apparently rational choices made throughout the game. It involves an auction for a dollar bill where the second-highest bidder loses the amount that they bid, making them the biggest loser in the auction.