Vickrey Auction

XAM 5 | THE VICKREY AUCTION

This is like the Sealed Bid English Auction, but with a slight twist. The winner of the auction is the person with the highest bid. Of course, the bidders do not know the bid prices of other bidders. However, the winner's price to claim the product is the price bid by the second-highest bidder. Definition: Progressive - price classic bidding where bids are sealed. Mostly used for non-deterministic priced products.

Model/type | On-the-house product listing + Marketplace + NFTs

Dominance | Skill (skill vs. chance)

AuctionX revenue

• Consumption of $AuX Tokens to convert to PLAYs

• Platform listing fees (MarketPlace and NFTs)

• Success fees (MarketPlace and NFTs)

Applicability

• Sell services | High

• Sell goods | High

• Sell experiences | High

• Sell digital assets (NFTs) | Low

• Interbidder bid price | Closed

Token escrow (winner binding) | Yes (a deposit amount)

Auction time sensitivity | Fast, stops with the highest bid in the given time

Bot bids possible | No

Multiple Bids from one participant | No

Bid opponent | The participants

Winners:

Only single winner, the one whose bid is the highest

WIN WIN WIN applicability | High

• Auctioneer wins | Able to sell products at high price

• House wins | Revenue from sale of $AuX Tokens to participate + listing fees + success revenue percentage

• Winners win | They get the product at lower than the desired price

• Non-winners win | Nothing to lose, except a few PLAYs to bid. Also, if the top bidder refuses to claim the product, the second bidder can claim it at a third lowest price.

Example | The winning bid is $100, and the second-highest is $85 - then the winner will have to pay $85 to get the product. The advantage here is that it encourages the bidders to bid higher since they keep feeling that they will anyway have to pay less than what they are bidding. The winner must pay 1 cent higher than the highest second bid price in yet another minor tweak. So, in the above example, the winner will pay $85.1 to get the product.

If there is no second highest bidder, the bid floor price is the second-highest bid price.

Another case is when all bidders bid the same price (of course, above the bid floor price). Then, in this case, there is no second highest bidder. Instead, the winner is selected randomly and pays the bid amount (not the bid floor amount). In the case of digital goods, with multiple copies, one can select all items. A slight modification of the Vickery Auction is called Bid Shading Auction. Instead of paying the second-highest bid amount, the winner pays an average of first and second highest bids.