I read part of this article to my wife and she immediately say, "What, are they stupid?" Apparently, that's exactly the point of the article. People react far more emotionally than rationally.
I wonder how long it will take until someone has made an auction site based on that principle (if it hasn't been done already). Swoopo goes in the "right" direction, I guess.
It wouldn't work because you need to have leverage to force the second highest bidder to pay. In a room the peer pressure forces him, but on the internet he has nothing to lose by not paying...
Swoopo does something sort of similar to that by forcing you to pre-buy bids. If you haven't gone, check it out. It's one of the scummiest business models on the internet