I’m impressed! That’s kind of the conclusion we gradually came to as well, after a lot of trial and error. Better to not have people feel like their desperation is being capitalized on.
Another way to put it: when you’re really desperate to win a particular auction it’s really nice to be able to just say so honestly, with a crazy high bid. Trying to allocate the surplus equitably means that I have to carefully strategize on understating my desperation. (And worst of all, a mistake means a highly inefficient outcome!)
PS: To be clear about first-price vs second-price, it’s technically neither since there’s no distinct seller.
Here’s the n-player, arbitrary shares version:
Each participant starts with some share of the decision.
Everyone submits a sealed bid, the second-highest of which is taken to be the Fair Market Price (FMP).
The high bidder wins, and buys out everyone else’s shares, ie, pays them the appropriate fraction of the FMP.
“Even yootling”, or just “yootling”, refers to the special case of two players and 50⁄50 shares.
In that case, instead of bidding a fair market price (FMP), you say how much you’re willing to pay if you win.
True FMP is twice that, since you only have to pay half of FMP with even yootling.
So instead of deciding what you’d pay, doubling it to get FMP, then halving FMP to get the actual payment, we short circuit that and you just say the payment as your bid.
For yootling with uneven shares it’s easier to bid FMP and then pay the appropriate fraction of that.
I’m impressed! That’s kind of the conclusion we gradually came to as well, after a lot of trial and error. Better to not have people feel like their desperation is being capitalized on.
Another way to put it: when you’re really desperate to win a particular auction it’s really nice to be able to just say so honestly, with a crazy high bid. Trying to allocate the surplus equitably means that I have to carefully strategize on understating my desperation. (And worst of all, a mistake means a highly inefficient outcome!)
PS: To be clear about first-price vs second-price, it’s technically neither since there’s no distinct seller.
Here’s the n-player, arbitrary shares version:
Each participant starts with some share of the decision. Everyone submits a sealed bid, the second-highest of which is taken to be the Fair Market Price (FMP). The high bidder wins, and buys out everyone else’s shares, ie, pays them the appropriate fraction of the FMP.
“Even yootling”, or just “yootling”, refers to the special case of two players and 50⁄50 shares. In that case, instead of bidding a fair market price (FMP), you say how much you’re willing to pay if you win. True FMP is twice that, since you only have to pay half of FMP with even yootling. So instead of deciding what you’d pay, doubling it to get FMP, then halving FMP to get the actual payment, we short circuit that and you just say the payment as your bid. For yootling with uneven shares it’s easier to bid FMP and then pay the appropriate fraction of that.