Running a dollar auction can be a good way to make a little money (provided you have some guarantee that both the winner and the loser will pay up) however it is not as perfect a scheme as it might seem.
This is because you will only make a few dollars
before people realise they're only digging a bigger hole for themselves and stop bidding. You could run a lot of dollar
auctions but as word gets round people will stop taking part.
The one thing you must never do is auction off a large some of money in this way. The reason is that sooner or later people will start to work together. You could probably get away with five or maybe even ten dollars but GO NO HIGHER! Say you were to say hold a "fifty dollar auction" then something like this might happen:
You: "Ok everyone this is a "Fifty Dollar Auction" you know the drill: the two highest bidders pay and the highest bidder gets the money! So any offers for fifty dollars!"
Fool 1: "One cent"
Fool 2: "Two cents."
Fool 3: "Twenty cents"
Fool 20: "Eight bucks"
Fool 1 (to other fools): "Hang on a second I've got an idea. I'll bid ten bucks and then none of you guys bid and I'll win the fifty. Then I'll keep ten bucks to cover my losses and we'll split the rest of the money, that we all make an easy two bucks."