a normal auction in which a $ 1 bill (subnote?) is sold, only with one extra condition, the second highest bidder has to pay his last bid as well.

imagine how it goes, before the $ 1 dollar mark has passed, people feel it is worth bidding. But once started it is difficult to stop, it is always more worthwhile to bid extra, otherwise you end up paying but with nothing.

arms races & wars - the other party raises the stake, so we have to as well
old cars - just put in that extra buck to make it worth more
movies - one seldom thurns off a bad movie but want to see it end