Swoopo.com is the most efficient, addictive way to separate people from their money.

Consider the MacBook Pro that Swoopo sold on Sunday for that $35.86. Swoopo lists its suggested retail price at $1,799; judging by the specs, you can actually get a similar one online from Apple (AAPL) for $1,349, but let's not quibble. Either way, it's a heck of a discount. But now look at what the bidding fee does. For each "bid" the price of the computer goes up by a penny and Swoopo collects 60 cents. To get up to $35.86, it takes, yes, an incredible 3,585 bids, for each of which Swoopo gets its fee. That means that before selling this computer, Swoopo took in $2,151 in bidding fees. Yikes.

In essence, what your 60-cent bidding fee gets you at Swoopo is a ticket to a lottery, with a chance to get a high-end item at a ridiculously low price. With each bid the auction gets extended for a few seconds to keep it going as long as someone in the world is willing to take just one more shot. This can go on for a very, very long time. The winner of the MacBook Pro auction bid more than 750 times, accumulating $469.80 in fees.

Some winners do wind up with good deals. A few, on the other hand, wind up paying almost as much in bid fees as the item they're angling for was worth in the first place. Meanwhile, the losers can shell out hundreds of dollars in bidding fees before throwing in the towel, and end up with nothing. What makes Swoopo so fiendishly addictive is the tendency of people to think of the bids that they have already put in as a "sunk cost"—money that they have already put toward buying the item.

This is an illusion. The fact that you have already bid 200 times does not mean that your chance of winning on the 201^st bid is any higher than it was at the very beginning. A new bidder can come in at any time and at the cost of a mere 60 cents jump into the auction in which you've already spent more than 100 bucks. The money you've put in has gotten you no closer to the goal than a losing raffle ticket.

If this doesn't seem crazy to you yet, then maybe one more devilish bit will do it. Not only can you bid on computers, cameras, and other consumer products on Swoopo, but Swoopo also auctions off packs of Swoopo bids! Hilariously—or worryingly, depending on where you stand—those "Bid Packs" themselves sometimes wind up bringing in more in bidding fees than their face value. (That's not super-obvious: It can take a little math, but if you want to do that you can look at this pack of 75 bids—a "$45 value"—on which Swoopo may have taken in more than $85 in bidding charges, plus the final $17.16 closing price.)

Some of the ideas behind Swoopo have already been explored in a theoretical way by game theorists—check out this description of the "Dollar Auction," in which two players bidding on a dollar bill raise their bids by a penny at a time to stay in the game and end up paying more than a buck each. Other ideas behind Swoopo, like the reluctance of bidders to say goodbye to their "sunk cost," have been explored by economists such as Daniel Kahneman and Amos Tversky—and have been found to draw bidders deeper into the game. Swoopo—which recently got backing from a prestigious venture capital firm that should be ashamed of itself—plays off those insights to efficiently get people to make bad choices. It's the evil bastard child of game theory and behavioral economics.