I don't consider them fools, they go into the bidding process with the idea of spending a basket full of cash and the odds are that all of them bidding have that type of cash that is just basically laying around. Plus the cost of the tag in the end goes to a good purpose.
I was at a banquet one year when there was a mule deer tag up for auction. I actually made a bid of over $100,000 for it just to see how it felt to do something like that. I was a little bit worried when it took a bit for the next bidder to bump my bid up. That tag ended up going for close to $200,000, and it was just for a general season tag. Not one where you could hunt the whole state for 365 days like a Governors tag usually is.