On Auction Loot Systems

Ferrel at Epic Slant had a post on Bidding Systems, where he was looking for comments on a zero-sum bid system. I commented with a giant wall of text, and figured I'd post it here as well.

My guild used to run an auction system (English bid, multiple bidding rounds, winner pays bid, like a traditional auction) before we switched to a Loot Council system. What we found is that a bid system works best if the players are willing to be aggressive with bidding. But a lot of players don’t like the feeling that they are competing with fellow guild members–the adversarial nature of the system–and they do things like “pass to someone else, she needs it more”. Which you know sounds like a good thing a tight-knit group would do, but actually tends to warp the bid system.

I’d like to add that the “not bidding aggressively” was not collusion per se. It was more a feeling that bidding aggressively was “impolite”. That aggressive bidding, especially if you had won something already, was somehow saying that gearing up your character is more important than gearing up your guildmate’s character. So out of respect for the social ties that bind the guild together, people refrained from bidding if they saw that someone else really wanted the item.

But in reality, that aggressive bidding was *necessary* for the auction system to work properly. Points needed to be spent, and items need to go for their “true price”.

Like, let’s say you know your popular guildmaster really, really wants Uber-Weapon off this boss you haven’t killed yet. On your first kill, the weapon drops. If your guild is the type of guild who would collectively pass the weapon to GM in appreciation for her hard work, your guild is a bad fit for an auction system. That weapon needs to be auctioned off, to be sold for hundreds of points, even if a relative new person gets the weapon over the GM. There is no room in an auction system for your raiders to feel bad about outbidding the GM for the weapon.

There was also some drama associated with bidding. Like if people knew that Dave wanted an item, they would bid on that item to drive up the price. But if Sally wanted the item, no one would compete against her, letting her have it for very few points. Naturally Dave would get upset at this behavior.

That was my experience with a bid system. I liked it a great deal, our paladins were okay with bidding against each other for items. I think we liked having the rest of guild be amazed that a healing shield would go for hundreds of points. But a lot of the other classes and people had issues with bidding, and it prompted the change in loot systems.

From a more theoretical standpoint, what’s important in a bidding system is not really where the points come from (the zero-sum part). Bid systems tend to flush out point inflation by their nature (again, if people bid aggressively). So you don’t need to use zero-sum. Handing out points based on time or attendance will probably be easier.

The important part is how the auction occurs. English bid is the system everyone knows, but multiple rounds means that it is very time consuming. It’s also a good system to “discover” prices. If you don’t know how much an item is worth, you’ll soon find out as the price starts increasing.

Sealed first-price auction is a single round of secret bids. Whoever bids the highest wins the item, and pays what she bid. It’s fast, but it can be very hard to judge how much to bid. You don’t want to bid thousands of points if you’re the only bidder.

Vickrey auctions are my personal favorite. Like the auction above, there’s only one round of bids. But the winner pays the *second-highest* bid (sometimes second highest + 1). This means that the optimal strategy in a Vickrey auction is to bid what you think the item is worth. You’ll either win the item and pay less than you think the item is worth; or someone else will win and overpay for the item. The problem with Vickrey is that a lot of other people simply don’t “get” the system, and not understanding it leads to dissatisfaction. There can also be some drama when people deliberately pitch bids high in order to make someone who really wants the item pay more. This is mathematically a bad strategy, but can lead to bad blood and harsh feelings.

That’s what I think of auctions. To be honest, if I had a guild that was totally on-board with Vickrey, it would be my preferred loot system. But I think the other two types of auctions have enough disadvantages, especially with regards to speed, that I would not use them if I could use another system instead.