About the $100 Bill Auction

OK so I'm going through Games People Play: Game Theory in Life, Business, and Beyond, and it mentions a game involving hundreds of (allegedly elite) Wall Streeter groups that resulted disastrously. Yeah, I'm talking about the $100 Bill Auction.

Basic rules: Everyone bids for the $100 bill, and the highest bidder pays the bid, and gets the bill. The catch: the 2nd highest bidder must pay the bid, and get nothing.

The average winning bid: $400 (where the top bidder loses $300, and 2nd top bidder $395~)

Attempting to "win", these "titans of Wall Street" ended up taking huge losses. As a corollary, why are these people managing other people's money? Who the heck's managing your KiwiSaver account (New Zealand version of 401k)? The level of incompetence is scary within the industry.