by PotKettleBlack » Fri Oct 01, 2010 5:34 pm
Well, the way it would work is the same as this, only instead of paying your actual bid, you pay the second place price.
So, in the two that I highlighted (as a commentary on being close but not getting a cigar), the winning bidder, would pay my bid rather than his own. The reason is to establish something more like the market value of the commodity being traded, in this case, the player.
This style of auction is a little prone to collusion, though with 11 interested bidders (or maybe 12, don't really need to have a baseline bid with a closed auction, though it's nice), collusion is difficult to pull off.
I'm now 5.5 years out from the class where I got my auction theory, so the exact math of why this works better in certain cases than what we're doing is fuzzy in my memory.