I'm thinking of applying auction theory to the game-balancing auctions which sound like they're so popular in eurogames. Hovever, I've only played a few of these myself. I wanted to get feedback on whether my understanding of the general structure of these auctions is correct. Mostly, I'm basing my understanding on "Heart of Africa" (which I also might get partly wrong, since I don't have it handy).
- There's an auction for something which is of significant strategic value, with the auction repeated several times throughout the game (it's not a one-time thing), so it's an auction for turn order, or some such.
- The auction might be an open-bid, round robin (in which case does the rule about who starts the bidding matter?) or a sealed-bid (secret and simultaneous bidding).
- It's an "all-pay" auction, meaning that everyone pays their bid whether they win the auction or not.
- The players have some secret conditions which affect how valuable the auction item is to them (for instance, face-down cards). (Note that the auction "item" might be the right to choose among several options.)
- The earnings from the auction are redistributed to the players according to some rules (generally balancing rules, favoring those who are somehow disadvantaged).
Does that pretty much capture it? Am I missing an important element, or getting something completely wrong? Or, on the other hand, are these game-balacning auctions much more varied than my outline implies?
It might be weird sounding, but irdesigns510, you read it correctly. If I recall correctly, Heart of Africa (and I think some other games with auctions, maybe the old version of Shogun?) had all-pay auctions, which really did mean that the single winner won the (potentially very valuable) prize (like going first), but everyone else had to pay their bid also.
All-pay auctions have been studied a bit by economists, but usually not as real auctions, instead used as a model of certain kinds of competition-like a race to do R&D on a new product, or lobbying semi-corrupt public officials. I think that experiments show that you're right, and that people seriously overpay in these auctions. That doesn't feel like it matches my experience from games, where I've always felt the bidding was on the low side. I'll have to think about that more.
Anyway, for the purposes of this discussion, I guess what I'm curious about is not whether the all-pay auction is crazy, but whether it's what's actually used a lot.