Amazingly before the week is out, most students would rather prepare than be embarrassed by their peers in class. What seems to occur with this process is a shift of blame from the professor to the peer group for the anxiety and animosity that comes from class discussion and unacceptable levels of class preparation. Those peers who are unprepared usually know who else is unprepared. This public acknowledgement seems to motivate students to be prepared in the future resulting in a more profound class discussion even in an auditorium format. Start at that number by seat row asking questions during class.
Students then call on each other as above.
A final touch to this process is to keep score on the board in a t-account format. This is the instructor versus the class in terms of the number of times a question or issue is answered correctly. If a student is wrong or not prepared, the instructor get a point. When the students answer appropriately, the student side gets a point. This may seem childish for graduate students, but they really get competitive with the professor.