On Fridays, the entire desk would often play an interesting game. Everybody chucked their corporate ID in a sack, and anted up something like $20-$100 (depending on rank). Then, the head trader would remove the IDs one by one from the sack, reading out the names loudly across the entire floor. The last ID in the sack got the entire pot. It was winner take all and no splitting the pot at the end. When there were only 20 or so IDs left, things got interesting: a mob formed, and trading started. People with IDs left in the sack sold their IDs to the highest bidder, selling out early and monetizing rather than risking elimination. Fair value for an ID is a simple calculation: if the pot is $2,000 and there are 10 IDs left, then the option on one ID is just $2,000/10 = $200. That’s not the way the market traded though: IDs would inevitably sell for a premium, and the closer the process was to a close (i.e. the smaller the number of IDs left) the higher the premium got on a percentage basis. Mentally, it seemed people were irrationally willing to overbid for a large payout, and the likelier the payout, the more they’d overpay. Also, there were structural forces at work: it was Friday afternoon in New York, and people wanted the cash to blow on the weekend. I bet that steak at Peter Luger’s tastes even better if it was bought with the trading floor’s money.
the rest is interesting and even more entertaining.