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Posted By: peter chao

It was a long, long, time ago...in a land far away. A sleepy undergraduate was learning the subtlties of Game Theory. Believe it or not, I learned something. A sales transaction is a zero sum game.

By this I mean, the retailer wins and the consumer loses. The reason why it's considered fair is that the retailer provides a service and is fairly compensated for it.

If the above is true then how do the auction houses do it. Is it done with mirrors. Here's what they managed to do. They have persuaded everybody that is a party to this game that they have won. When an item is auctioned off, the seller, the buyer, auctioneer, and other bidders all feel that they have won.

It's a pretty incredible feat considering the House normally takes approximately 40% of the deal. If they don't do it with mirrors, how do they do it. Let me know your thoughts on this.

I know you guys can't all be excited by your work. Here's a chance to actually exercise your brains and get rid of the cobwebs.

And here's another question that will keep you up at nights. Which auction house pulls off the trick the best.

Peter