Auctions have been around for many centuries, and those who have had some game theory know that there are many kinds. In some, you outbid others by offering more and more for the object being auctioned, in some the auction clock starts with a high price and descends until someone (the winner) yells “stop!” Most auctions have the winner pay the last bid, though some have the winner AND the next highest bidder pay, or even have every participant pay (all-pay auctions). I came across a newly popular type of auction that has been attracting quite a bit of attention. In a pay-per-bid auction, such as swoopo, your every bid increases the price by a set increment (such as one cent), but every bid costs you 60 cents. Some websites claim that these auctions are rip-offs, some advertise the great deals (and iPad for $11, a gold bar for $5, etc.). It’s fascinating to take a look at recently ended auctions on swoopo: here is someone paying $787 ($727 in bids and $60 in the final price) for a smart phone that swoopo says costs $620 and you can get for probably $100 less than that elsewhere. On the face of it, this looks like a large-scale and real-life variant of the dollar auction. What complicates this calculation is that one can bid on “bid packs” on swoopo, so the person winning that phone may have used bids that in fact cost him much less than the face value of those bids. There are only a few academic papers analyzing this new craze. For some interesting theory as well as empirical analysis, take a look at this paper. So how can it be profitable to sell a $100 Visa gift card for $1.98 to someone who used just 96 bids and thus got $100 for $60? Well, for the price to get to $1.98, 198 bids had to be placed. Ignoring the aforementioned possibility to buy bids at a discount, those 198 bids mean an income of 198x$0.60=$118.80. According to the paper cited above, the profit margins for swoopo are astounding.