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Except none of those are good analogies to what's going on here, where people aren't actually bidding on something of monetary value. I find it hard to buy your argument that this is in any way unethical.

The losers are winners until another winner comes along.

Lots of huge businesses are based on irrationality. Cigarettes, gambling, etc. A fool and their money are easily parted.

And those businesses are accordingly regulated by society. But good luck trying to foster that winner-takes-all free-market world of yours. I'm sure it'll be a real blast.