Auctions as a Game Balancing Tool

In this article, game design instructor Sebastian Sohn gives a summary of different auction types used in board games.

Auctions are widely used in board games as an in-game mechanic or as a meta game.

Auctions are how conflicts are resolved in life. Auctions deal with the what economists call "unlimited wants yet limited resources." Auctions are also great for game design for several reasons including:

1. Realism and use in day-to-day life.
2. It’s a balancing tool; allowing the designer the ability to offer asymmetrical starting resources, yet places game balancing in the hands of the players.
3. Finding the right price is an enjoyable game of its own. 

Auction Use in Board Games

Axis & Allies 
English Auction used as meta-game balancing tool.

In this WWII-based board game, the Allies tend to win more often due to historically accurate (Allies won) but poor game balancing. In many tournaments, players bid to play as the Allies. The winning bid is paid to the low-bid player, who then begins the game as the Axis Powers. This allows for a more balanced game, as the Axis player can now use this influx of resources to strengthen his strategy.

No Thanks! 
English Auction used to avoid a penalty.

No Thanks! has an interesting twist to auctions. In normal auctions, players pay to win something, while in No Thanks!, you pay to avoid penalty points. Every round, a card with penalty points ranging in 3-35 points is offered. In turn order player may take the penalty points or bid one chip. If you take the card, you take the penalty points and the chips on top that you can use to avoid other cards.

Vegas Showdown 
Multiple English Auction occurring simultaneously
Play Vegas Showdown AI for free, costs to play with people 

This game’s auction offers a multiple items simultaneously. Players bid in turn order. If one gets outbid, that player is bumped off auction block and can bid on something else next turn. Being bumped usually triggers a chain of bidders being bumped from item to item until everyone's ideal price is reached. This is similar to the rules of a White Elephant Gift Exchange, a holiday party game used to distribute gifts.

Modern Art 
Multiple types of auctions

Modern Art is a pure auction game where you act as buyer and seller of modern art painting. Continuous turn-based English, once around English, sealed, buyout auctions are featured. When you sell a painting, money goes to the selling player, not the bank. This is a great game to play to learn how different auctions work.

Auction Basics

Most auctions end when the highest bidder pays for and receives an item. Auctions have two prices--the bid price and ask price--as well as two parties: the buyer (bidder) and the seller (asker). When the bid and ask price are equal, a sale is made. Where the payment ends up is important in a game's economic system. Some examples where the proceeds end up:

Monopoly: when a property is auctioned off, all proceeds go to the bank. And yes, Monopoly has auctions if you play by the official rules.

Modern Art: the seller receives all proceeds for paintings sold unless she buys her own offer. If one buy their own offered painting, then the seller pays the bank.

Hollywood Blockbuster: the proceeds of the auction are distributed equally to all other players.

Common Auctions

English auction
Any bidder may offer a bid at any time until the auction’s close. Each bidder can bid or rebid at any moment. This is the most common auction in life and can be emotional, causing people to become irrational and overbid.  

Turn-Based English Auction
Since English auctions can be hectic, loud and highly emotional, many games use a turn-based approach: each Player raises the bid in turn order or passes. To shorten the auctions, most games will not allow a bidder to reenter the auction once the bidder passes. English auction may be continuous, each bidder keeps bidding higher multiple times in turn order or may be once around, declare one and only one bid in turn order.

Sealed (first-price) Auction
Bids are submitted secretly to the seller; participants do not know each other's bids. This style is commonly used in real estate sale and by the US government to procure contractors.

Vickrey Auction (sealed-bid second-price auction)
A sealed auction, the highest bidder wins but pays the second highest bid. Used as quick auction that has similar results to a English auction. Proxy bid by Ebay and US Treasury securities sales use an auctions similar to Vickrey. War of Attrition, uses an auction similar to Vickrey to simulate and analyze human behavior. War of Attrition is used in branch of mathematics called game theory as a scientific model.

Exotic Auctions

All-Pay Auction
Auction that has the highest bidder winning, but all bidders end up paying. This is used as model for political campaigns or lobbying. It’s good for auctioning abstract resources like turn order (initiative). In Age of Steam game, turn order is auctioned in this manner, but only the top two bidders pay.  

Top-Up Auction
This is a variation of the all-pay auction. Winner pays as usual but the losers pay out the difference in between their bid and the next lower bid. Top-Up Auctions are commonly used by charities as fund raisers.  

Dutch Auctions
A high asking price if offered and is steadily dropped until a buyer accepts. The dutch tulip market and the US Treasury both use this style of auction. Ebay used to offer this type of auction as a way to sell multiple, identical items to multiple buyers. It has a similar effect to sealed auctions, as only the winner’s bid is known. Buyout Auction The seller offers with a fixed price. Ebay uses Buy-It-Now on top of their standard auction as way to purchase immediately at a preset price, rather than wait for the end of an auction.  

Reverse Auction
The roles of buyers (bidders) and sellers (askers) are reversed. Asks are lowered until a bidder accepts. In traditional auctions, multiple bidders usually compete for one good or service offered by one seller, while in a reverse auction, multiple sellers compete to provide goods or services to one buyer. Priceline.com and Lending Tree use this model by acting as brokers in pooling large number of sellers to few buyers.

Walrasian Auction
In a Walrasian Auction, both bid and ask prices are adjusted for in batches, until an equilibrium priced is reached. This is similar to how the stock market works. A similar auction style can be found in the video game, M.U.L.E.

[This article originally appeared on Sebastian Sohn’s personal blog.] 

Sebastian Sohn is a "well played" game player, critic, and game design instructor. He is especially fascinated by the use of games as an experiential teaching aid and constantly on the lookout for tabletop games, videogames, and roleplaying games that teach life skills.