Auction

Mechanism · II – Allocation & Selection immediate · irreversible · open / concealed / asymmetric · competitive

Auction allocates scarce goods among competing claims with differing valuations: a bidding procedure awards the item and at the same time discovers the “price”.

Design question – How does your game allocate scarce goods among competing bidders – and how does the price emerge?

Reference example – Modern Art: paintings are auctioned – openly, sealed, or with a single bid per person. Power Grid: power plants go to the highest bid. World of Warcraft: in the auction house, players bid on items that others put up for sale. Modern Art (English Auction) · Cyclades (Sealed Bid) · Fresco (Turn-Order Auction)

Structural pattern

Input -> transformation -> output: a scarce good and several bidders become, via a bidding procedure (bids), an award to the highest bidder with price discovery.

Regulated in permitting mode (place a bid, pass), constraining mode (each bid exceeds the previous one by at least the increment; nobody bids more than the budget allows) and conditioning mode (when nobody bids any more, the highest bid wins the lot; only the highest bidder pays, or everyone does; what applies in a tie). The course of bidding is a procedure (open ascending, sealed simultaneous, descending); in a game, minimum bid, increment and budget become specifications.

Design parameters

• Bidding procedure – open ascending ↔ sealed/descending
• Payment rule – winner-pays ↔ all-pay/second-price
• Information – all bids visible ↔ fully concealed
• Currency – uniform ↔ heterogeneous resources
• Repetition – one-off ↔ multiple rounds
• Zero-sum – pure transfer ↔ value creation through allocative efficiency

Related Mechanisms

• Conversion (MEC-03) – Frequently combined: bid -> good.
• Investment (MEC-21) – Frequently combined: risk of bidding.
• Selection (MEC-07) – Frequently combined: what is being auctioned?
• Priority (MEC-08) – Frequently combined: bidding order.

Ludic Organisational Structures

Market (core) · Banking / Credit (dynamic)