Auction/Game Theory Strategies?

[dmbolp]

Any experts here? Live in a condo with 130 units, and 11 new storage rooms were added to a large unused space, HOA selling them thru an auction on www.32auctions.com. Units are similar size (4'x8'), all with starting bid of $5k (all-in cost of the units). 22 owners have expressed interest in an email questionnaire. The timing is suspect, and there are other, unrelated reasons to question the board...they've taken over a year to get this auction set up, kicking it down the road every month for a year. This past TUE was the monthly board meeting, the next day (yesterday) they finally sent out the auction format info, the auctions end on 3/18 which is the day before the next board meeting, so they can never be questioned about the auction format at a board meeting. Format is:

- You can bid on any/all auctions

- You don't have to pay at the end, the next high bidder gets a chance

- If you end up as the high bidder for multiple listings then you only get to buy the highest priced listing

- Proxy bidding allowed (so fake bidders can put in $1,000,000???)

- No popcorn bidding, all auctions end at the same time

Without any knowledge of Auction/Game Theory I think this format might possibly be the worst format for keeping prices low:

- Bidders aren't held to pay, so any idiot (re: HOA Board members, any owner who wants to beef up the HOA coffers) can bid up the prices on any/all auctions and not have to pay if they end up the high bidder, just forcing anyone actually interested and willing to pay to bid higher and higher

- Being able to bid on as many auctions as you want will result in a ridiculous number of bids, driving up the prices

- Even a legit buyer who ends up as high bidder for multiple auctions can only buy one, so I'm thinking there's no reason NOT to bid on all 11 auctions?

Hopefully we will be able to tell how many bidders get ahead of us, and then we can decide if we want to go higher. Other strategy is to wait, like eBay, and bid last minute, but then we may be paying too much over bad bidders.

What's the strategy to end up paying the least amount for a unit? I'm thinking bid on all initially, and hope there's one at the end where all other bidders are either non-paying or winners of other units.

[Lee3691]

Bid different amounts randomly on all 11 units?

[dmbolp]

Originally Posted by Lee3691

Bid different amounts randomly on all 11 units?

Woah...I like that. That would work if you get to pick which auction you actually want to pay for at the end; otherwise you're stuck with the most expensive.

[Lee3691]

Originally Posted by dmbolp

Woah...I like that. That would work if you get to pick which auction you actually want to pay for at the end; otherwise you're stuck with the most expensive.

Wouldn't it be better if they just took the 11 biggest bids? I think they'd make more money on it.

I also dont see how you can be stuck with the most expensive if you are able to pull your bid.

[dmbolp]

Originally Posted by Lee3691

Wouldn't it be better if they just took the 11 biggest bids? I think they'd make more money on it.

I also dont see how you can be stuck with the most expensive if you are able to pull your bid.

You can pull a bid, but I don't think you can then say "but I want a cheaper one where I was also the high bidder", at least that's how the rules are written

[dmbolp]

OMG, make two users, bid the minimum with one, bid $1MM with the other user, no one else bids, $1MM doesn't pay, I get a unit for the starting price

[YouNeverKnow25]

are you sure that's what they mean by "proxy bidding," Peter?

typically in the auction world, that terms refers to a specific style of pricing the item--the winning bid is not the actual highest bid, but the second-highest bid plus X

if you and me are the only two bidders, and I bid 5 dollars but you bid a million, you'd get it for 5 plus the variable. it's a means to encourage people to bid what they're actually willing to pay at the outset, rather than starting at like, a dollar and interminably increasing it in tiny amounts in an attempt to defeat bidders.

the "proxy" term comes from how the currently winning bid is displayed. same scenario as before, you and me bidding: but Lee wants to bid. when Lee entered the online auction, the CWB he'd see would be (5+X). he tries to bid 1,000. he wouldn't win, but he serves to increase your ultimate price in proxy.

[dmbolp]

Yeah, I'd need 3 users. I bid the $5k minimum, #2 user bids $1MM, #3 user bids $1.1MM which finally gets the current bid up to $1,000,000...Users #2 & #3 don't pay, I get it for $5k

Good catch, thanks

[YouNeverKnow25]

and typically, if the winner welshed, in a proxy auction format, the second highest bidder would get it for the price of the third highest bidder's bid + X, and all the way down until someone actually did want to pay

[Lee3691]

Are all of the storage spaces the same? If so, I would assume the higher bids would be on 1,2,7,8.

[K270]

Just curious, if a tenant loses and doesn't get a storage space, can a tenant who won a space, rent it to a tenant who didn't win?

[dmbolp]

Originally Posted by Lee3691

Are all of the storage spaces the same? If so, I would assume the higher bids would be on 1,2,7,8.

They're numbered 50-60, so I'll add the 5 and avoid those

Originally Posted by K270

Just curious, if a tenant loses and doesn't get a storage space, can a tenant who won a space, rent it to a tenant who didn't win?

Yes