From: mprunx@violet.berkeley.edu (;;;;RB05)
Newsgroups: rec.games.board
Subject: Re: A postal bid system
Date: 27 Jan 1993 02:51:17 GMT
Organization: University of California, Berkeley
Distribution: world
NNTP-Posting-Host: violet.berkeley.edu

Except to the degree that bidding systems penalize people for not being
able to check the forum through which the auction is being held (whether
by mail or through news), I don't see how any method is more fair than
another. No one pays more for a game than he or she is willing to pay, and
no one sells it for less than they're willing to take for it.

It is true, I grant you, that some systems create an atmosphere which
will encourage fools to get excited and overbid (I'd say this is more
likely in open bidding), while others may allow a lucky person to "win"
something at a relatively low price.

With this in mind, I suppose you could say that a system is more
satisfactory if it avoids these extremes--no one should feel uneasy
after buying something because they think they got carried away, nor should
anyone regret not bidding when they see something go for a song.

Brad's approach may accomplish both these ends, but it seems a little
complicated to me. May I suggest two alternatives?

1. This is a Dutch auction as I learned it. The seller announces a
   price for the item. (For his own sake, it should probably be
   somewhat over what he thinks the item is worth.) Each day, the price
   is discounted by a dollar. Anyone may purchase the item at the price
   which is current on the day of his bid. In order to make this
   approach fair to those with limited net access, one should be
   allowed to bid ahead, saying "I'll buy _Blotkrieg_ for the going
   rate on the 19th".  Of course, one will know exactly what the price
   is going to be on the 19th. The only question is, will it still be
   around by then?  Bidding should be closed to discourage people from
   bidding backwards from the distant future. If the seller wants to
   avoid giving the item away, he or she should set a minimum
   price/latest date; after that date, the first person to offer the
   minimum should get the item.

2. The second approach is the one that someone here used to resolve
   competing bids. I see no reason why it couldn't be used from the
   start. The seller sets a minimum price, and all those interested
   submit closed bids. The person who bids highest gets the item for
   a price equal to the second highest bid plus $1 (or the minimum,
   if no one else bids). Ties can be resolved either by giving the
   item to the first bidder at the price he bid, or by having another
   round of bidding between the tied bidders, with the minimum bid
   being the previous high bid (of course).

I believe that both of these systems encourage bidders to offer what
they think is at least a fair price for the items being sold. In the first
system, if you're interested in an item, the pressure to go ahead and
buy it becomes extreme once it has come down to the price you consider
reasonable. In the second system, assuming you actually want an item,
it obviously behooves you to bid a little more than you think anyone
else will.

On the other hand, both systems should tend to keep people from getting
carried away. In the Dutch auction (my definition), once you've decided
to buy at a given price, you get the item without having to worry about
a competitive bidder nickel-and-diming you up to a higher price. In the
other system I've described, the price you pay is only just higher than the
amount set by the rest of "the market". Needless to say, there's a strong
disincentive against foolishly overbidding (it creates too large a margin
for other fools to bid up your final price if you win). 

Finally, I don't know if anyone is concerned about malicious bids designed
to drive up prices.... It seems to me that while this is possible under
an open competitive bidding system, it's impossible in a Dutch auction
and extremely risky in the other system.

--Elliot Wilen
Newsgroups: rec.games.board