PAX West 2025: Auctions and Bidding Mechanics in Games

I'm Rim. >> I'm Scott. >> We are the hosts of a podcast called Geek Nights. And we are to here today at PAX West 2025 to talk about auctions and bidding in games. Now, many talks at conventions will start with something like this. This sort of 101 level, what is a game mechanic? Since the dawn of time, people have played games. I feel like if you are at a panel that is about auction and bidding mechanics and you are at the Penny Arcade Expo, you already know what a game mechanic is. >> And if you don't, we've done several other game mechanic titles. You can go on YouTube and watch us explain what a game mechanic is to some other audience. >> But also, that kind of discussion is usually not that valuable or important because you're all here. You probably play games. You know what a game mechanic is. In your darkest heart of hearts, you know what they are. Those things are all game mechanics. Thus, auctions and bidding are also game mechanics. So, if you want to quibble about a definition, I would just say, is an auction like any of the other things on that list and treat it the same way? >> And if you want to be a pedant, don't waste your time because that won't help you get better at games. >> Yep. Richard Garfield in one of his books uh characteristics of games which we cite a lot in our talks. You can just read this book and skip like 90% of what we're ever going to say. But he talked about how you don't want to make definitions too early in the process of dissecting something. Don't be prescriptive and try to make a formal definition. Be descriptive. Describe what you see. Describe what you find. Describe what you're engaged with. And the prescript prescriptive definitions will come later, usually out of academia. You all know what an auction is. >> You think you know what an auction is. >> But one thing we found doing research for this talk is that auctions unlike most other mechanics we have talked about or explored over the years are a little bit controversial in that a lot of people do not like auctions. Like really do not like auctions. I found multiple Reddit threads of people complaining about games having auctions in the first place. at PAX this PAX on Friday in the Friday night frenzy tournament I mentioned oh we're giving this talk and someone at the table unprompted says I hate power grid auctions aren't fun and this was a popular sentiment at the table even if you consider just auctions like in everyday life like real auctions with real money for real things right people have an anxiety about like haggling right it's like you go to the store and something has a price and you buy it and it's like ah easy there's no stress You go into a store, something has no price and you have to haggle with the proprietor about the price. That's stressful and a lot of people don't like that. They would rather like overpay just to not have to deal with that. >> So, if you play auctions, I'm curious. How many of you like auctions when you play them in games? Like that's why you're here. >> Okay. >> Is anyone here cuz you want to get better at auctions? Like you're bad at them? >> Yeah, we're going to help you. Maybe >> we are going to help you. I think >> hopefully. >> So, what we first want to address is what are auctions actually used for in games? Before we talk about what an auction really is, let's talk about how they're used. What do they do in games? Now, that is an auction from a game that we are not going to talk about unless we have >> We're going to talk about this game >> at the end. This is a game called 18 Chesapeake. There's a class of games called 18xx games. You may have played a train game before. Well, if you think Ticket to Ride is a train game, you're wrong. These are games where people who wear suspenders that often have beards are going to trade stock certificates around and look at spreadsheets for four or more hours. We usually play them online on a website called 18X >> that cuts it way under four hours. This website helps a lot and it's free and has no ads. >> But these games may or may not include auctions over the course of the game. We will leave it as an exercise to the listener as to whether or not those are actually auctions, but they usually start with an auction. And that starting auction is so important that it will often decide the entire course of the rest of the 4-hour game that you play. And they look like that. This auction is weird. Even if there wasn't sunlight coming in over the screen, you would not understand what's going on in this unless we explained it at length. This is a complicated auction. It's ugly. There's blobs of text, but we're bidding on buying those things in a complicated and arbitrary fashion. And the thing about this auction is that we like this specific auction and we play a game that looks like that on purpose a lot. >> Yeah, that's the game log on 18xx games. So each one of those squares is a time that we played and it probably goes off the bottom. >> Oh, it goes it goes a ways back and I have won weirdly I was looking through this a high percentage of those. >> I won often enough. >> So we're going to talk about something we haven't talked about. You know this is our 77th talk at a PAX but we usually just come in and say our thing and then we disappear but get a little more reflexive as I get older. I want us to talk a little bit about the lens through which we are examining games because you may find after you listen to us for the next hour that you may not want to perhaps play a game with a person like me or a person like Scott. >> I think a lot of people don't. Yeah, I think a lot of people out there when they look at games that some people have a really simplistic view. They play the game and they just examine how they felt while they were playing it. That felt fun. That didn't felt fun. I was frustrated. I was stressed out. And then that's how they evaluate a game. I like this game or I don't like it based on how the time they had playing it felt emotionally. That is a valid way to analyze a game. But that's not what we do, right? There's also people who will look at the theme of a game. They'll be like, "Ah, yes, I love penguins and this is a penguin game. I love this game so much." Right? Even though who knows what the rules of the game are. It has nothing to do with that, right? They're all about what the game looks like, the story the game told, especially video games, right? They might remember the characters and all that stuff. We don't do that either, right? We strip all that away and we look at the numbers and we care about winning, right? How can I win this game? What decisions do I make? How difficult is this game? What skills are needed to win this game? What is it the game asking of the player? Right? And what decisions are the best? Does this game have a lot of replay value or do we have an answer to this game? Like, no, this is the answer to this game. There is no reason to play it anymore. And if you do this, many games will not be fun anymore. >> Most games will not be fun anymore. We played I won't name any of the names, but at this pack, we played a bunch of games we've never played before. And one playthrough, we then spend more time talking about the game than we spent playing it. And then we decide, well, I never need to play that game again because now I understand exactly what it is. It has no more secrets to reveal to me. >> Even though the game had these really fun metal gears to spin, >> those gears were really fun, >> right? It was super fun. And I think a lot of people would say, "Oh man, I love spinning these metal gears. game is great and we're like I love spinning these metal gears. This game is one plays worth the end. >> So again, we're not I'm not centering us as we are experts in this field. I'm centering us as you're in a room listening to us. So I want you to understand where we're coming from, what our priors are because if you disagree with anything we talk about when we get into the meat of this talk over the next 4550 minutes, I would love to hear your priors. Where are you coming from? How do you engage with games? And one of the best ways to figure out what a game is really like is to engage with the memes that come out of the people who play that game off on their own in the dark corners of the world. That is a quote from our friend group. We say that a lot. As I get older, my predilictions grow increasingly esoteric. >> Right? There's no way we went to 40 paxes and are still young somehow. There's only a few a year. It took a long time. But that word esoteric, I'm going to show you an image that I made on purpose and sent to some friends who laughed at it in the context of one of those train games. And this image is the very definition of esoteric. I refuse to explain this image, but the definition of the word esoteric is that is intended for a small number of people with specialized knowledge or interest. This doesn't just apply to train games, but we're going to get into some train game memes in a second. Think about people who play League of Legends. When they are talking to other people who play League of Legends and they don't think anyone who doesn't play League of Legends is around, they just say words that sound fake and then they laugh and you don't understand why. But if you look at the memes that come out of dense, deep play of any game, you will find what it is that is at the core of why the hardest core community around those games engages with them. and plays with them. It sort of is a lighthouse that will take you to what is at the guey center. What are these people orbiting around? >> And then if you finally understand names for yourself, then you can be like, "Oh crap, I'm one of those people now." >> Yep. Or this could be a warning. This could in fact not be a place of honor. >> So, uh, I sent that image to someone a while ago because in 18x games you need to float companies. You're playing a whole realistic stock market. realistic stock market. And it turns out that certain things you can buy in the auction may or may not be good, but most players don't want to engage with them. In these games, when you are floating a stock, a company, you have your train company, you're the president, you're making decisions for it, you eventually intend to commit financial crime and loot that train company into your own coffers. You are playing robber barons. You are playing criminals. There is no regulation. The best thing in the world is having a train company, billing some investors in from the board, and then ruining that company and dumping all your stock. The worst thing in the world is if Scott buys some shares in my freaking train company and thus devalues the stock early in the second round of IPOs and now I don't have enough capital to loot it effectively. Don't try to read that text. You do not need to read that text. While we play these games, our group of friends, we are having this dense semi-mathematical conversation the entire time. We are like posting screenshots of the maps and debating like, "Ah, well, you won't have enough capital to do this." And the thing about these games is that we're playing them openly. We kind of don't care who wins or loses. This is something people to take away. We play games through the lens of not caring who wins. I want to win. >> Yeah, Scott wants to win. >> But winning and losing are equally fun. I want to see what happens. But an incident happened not that long ago that I think illustrates the core of the way we play games and what we're about to talk about. This conversation starts when we're playing this game. We're a couple hours in and I notice that something hinky has happened on the board. I'm not going to explain all the details. Something hinky has happened. This has caused a catastrophe for some of the train companies. And I've noticed this. So, I pose the question, who played that tile? Like, who made that happen? >> Me. >> Scott was not sure if he is the one who made it happen. We start debating. And I think what Scott says, you can't read it up there, is I remember putting at least one evil tile in this game. But was it me? Was that the evil tile or did he do something somewhere else? And we are the kinds of people and we were playing a kind of game where our friend Tracy checks the freaking logs to figure out who laid that tile. So that is the lens through which we are going to talk about auctions and bidding. We are people who will check the logs and have a dense ongoing thick conversation about the minutia of these games. >> And that's the kind of person you need to be if you want to learn about auctions. So again, if you approach games differently, we would love to hear from you about what you think about auctions and bidding. Tell us where we're wrong because I don't think we're wrong about what auctions are. >> I think some economist might tell us we're wrong. >> Well, we're going to talk about an economist at the end of this talk. >> That doesn't mean we're right. >> But also, auctions are everywhere in games, whether you realize it or not. There's over 5,000 games listed on Board GameGeek where auctions and bidding are listed as primary mechanics included in these games, >> right? And people think about auctions and you're thinking about probably Micro Machine Guy, right? Like, you know, or like fancy people buying art, right? Like, oh, do I have $1, $1, $2. That's one kind of auction that auction. There are so many kinds of auction in every kind of game that you can possibly imagine. Sports, NFL draft, that's an auction for meat, real live players. It's a meat auction. It's a meat market, right? Same as every other sport. Whenever they have a draft, Magic the Gathering, it's also a draft. You're just going for cardboard instead of meat. That's an auction, right? You think about video games. You go to play some MOA or something and it's like, "All right, we're going to pick and ban the characters at the start. That's an auction, right? The auctions are everywhere. You just might not recognize them because you don't consider the fact that there's other kinds of auctions besides the micro machine guy hold up a paddle style. So before we go into definitions and go deeper, we're going to talk about Monopoly's auctions. Now I'm I'm curious. Is anyone here unaware until now that Monopoly has auctions? Are we past that as a gaming culture? Okay, everyone knows. >> Has anyone played Monopoly correctly according to the rules with the auctions? >> Okay, I haven't done that. I just Why would I waste my time? >> I have many times. So, the auctions in Monopoly, I want to really think about Monopoly for a second. Monopoly is a pretty bad game. It's very random. It takes between four and 40 hours to finish. We've given a whole talk about why Monopoly takes so long to end. Monopoly sucks. People play it. It's a big part of our culture, but people at a penny arcade expo generally are of the opinion that Monopoly is not worth playing. And yet, if Monopoly sucks so much, why does everyone in America who is not at a PAX alter the rules of Monopoly to remove the auction? >> Well, because that's how they were taught. But I think originally, where did that come from? It came from people not wanting to do the auctions and then forgetting that they even existed. >> So, I have an anecdote. When I was young, we'd play Monopoly. Played a lot of board games when I was very young as a child. Uh, in the n in the late 1900s is when I grew up. And Monopoly, I knew, I read the rule book, I knew Monopoly had auctions, and the adults in my life explained to me that we're not going to use the auctions because the younger children will never win a game of Monopoly. >> That's correct. >> Now, think about this for a minute. Monopoly is random garbage. And yet, if the auction is included, the skill floor, not the skill ceiling, the skill floor rises. If you are even slightly good at auctions, your percent chance of winning the random game of Monopoly skyrockets. And if you are even slightly below the line of basic proficiency in auctions, you are just hosed. Yeah. The skill floor is basically like you must be this tall to ride, right? So auctions, basically any kind of auction in almost any kind of game raises the skill floor and says you must be at least this skilled, this knowledgeable, this good at auctions or whatever that auction in the game requires or you are going to fail at this game miserably, right? You would either end up with no properties because you can't win any auctions or you would overpay for a whole bunch of properties and be hosed that way. Right? If you're not at least this good, your chances are hopeless. So think about that. Think about how powerful just adding a very simple auction that only happens a few times to the start of this game. How drastically it changes how the game goes. That shows the power of auctions. >> And that's also why weirdos like us like games with auctions cuz we want games that are more difficult. >> And even worse, Monopoly. If you play with the auctions, the game still takes too long. The game's still bad. Don't get me wrong. Because if you're all basically competent at basic math and auctions, then yeah, then now the auction doesn't matter anymore. But it makes the game end like two or three times faster. >> Not fast enough, but >> not fast enough, but significantly faster. >> It's like sprinkling a little bit of salt on a meal that's already disgusting. >> So, let's really think about what are auctions used for in games if they are so powerful. And there are basically three things an auction can do in a game. They can either broadly they allocate a resource of some kind. That's like the thing they do. That's what an auction is. But an auction can be used specifically in allocating that resource to balance a game that might be difficult to balance for a bunch of reasons we'll get into. But very dangerously, auctions will often if they are in a game, they will become the game to the point that nothing else you do in the game will matter. >> Yeah. Depending on your game design, you know, you might include auctions, which is like, okay, you included them as part of the game, but if you don't have enough other game mechanics in there, the auction could end up sort of overtaking the rest of the game, and that's all that matters. >> So, allocating a resource. This is a game called Alman Ray. I highly, highly, highly recommend this game. >> This game is so good. It's fast. It's tight. And it is just a series of auctions. You auction >> real estate auction. >> You auction off Baron Nike or Abu or whatever. Then you auction off whether or not you're getting favors from the god. You're just doing auction after auction after auction. And they're all different kinds of auctions. This game is so fun. But ultimately what it's doing in the game is it's allocating these resources. Who is going to get Baron Nike? And how much money are they going to pay for Baron Nike as opposed to Abu or Dakla? Docless sucks unless it's the third round. So, it's allocating a resource. Part of the game, you know, games have things like tokens come out, dice get rolled, stuff happens. That's the fundamental thing the auction is doing. There is a resource. The players may or may not want that resource. And the players are going to through some process pay for that resource in a collective fashion. Right? If you had to distribute the resources with not an auction, what would you do? You could shuffle them up and deal them out randomly. You'd be like, "Okay, you get Baron Nike. Woohoo. I'm lucky." Right? That's what an easier game would do. You could, I don't know, make it some sort of arbitrary turn order based thing, right? Where you take turns picking like it's like I guess that becomes an auction in a way >> a bad auction. Arguably that's I would distinguish auction from draft in that while mathematically they are the same, they feel different to gamers. >> Sure, we'll get into that later. >> Different kind of auctions feel very different. They're just categorically the same. >> So here I'll give you an example. Baron Nike in this game the way it works is every turn you put one of those chicklets on a bid, >> the green chicklet. Yeah, the little green thing. You stick it on one of those numbers. >> So, you can only pay the numbers. You can only bid 0 1 3 6. I forget what's under the 15. Is it a 10? Not 10. >> 15 21. >> It escalates if someone outbids you when it comes back around. >> So, I come in with my blue chicklet and I put it on the 15. Obviously, I couldn't put it on the six. That would be under bidding. That's >> Yep. It comes back around. I got to decide if I'm going to jump over Scott or >> You can't do that without a special card. >> Without a special card or I got to go somewhere else. So this auction becomes a fun interactive mechanism to reveal who is going to receive Baronike and how much they're going to overpay for it. Actually, right now on the board, Baron is looking pretty good because of those two pyramids. >> Got a pyramid. >> Yeah. But here's a different option. >> Pyramid. >> During the course of the game, the waters of the Nile will rise and fall based on how much people sacrifice to the gods. >> At the end of every round, you do a sealed auction. Everyone decides in their fist how much money are they going to sacrifice to the gods of the temple. And on three you all reveal. And if collectively a lot is sacrificed, the waters are high. If not a lot is sacrificed, the waters are low. Instead of bidding money, you can basically put a card in your hand that says, "Screw the gods. I steal from the temple." That is an auction. And it is really fun. All right. Balancing the game. So, you know, a lot of games out there, the one I think people think of the most are like TCGs, right? Because when you play a TCG, all the cards in the top corner have like a written value, right? It's like this is how much it costs to play this card. Or sometimes different CCGs for deck building cards will have values and like your total value can only or miniatures if you're doing a um a miniatures game, it's like, oh yes, your Warhammer army can only be so many points, right? things have built-in values and the game designers had to write down in a book, these are the values. And if they get those values correct when they design the game, all is well. But often times they will accidentally put too low or too high a value on something, right? They'll make a Magic the Gathering card that costs like six mana and it's like no one plays it because that's way too much. It's not worth paying six mana for that. Or they'll print another Magic card that's zero mana and it's like everyone puts four copies in because for zero mana that's a great deal. If you use an auction instead, then what can happen is you don't need to be a perfect game designer. The players are it's up to them to decide in the game, right? At that exact moment that that card comes into play, what is it worth, right? And so in power grid, you do auctions for power plants. They do have written values on them, but those are just minimums, right? You could end up paying way more than those numbers. >> If you're not paying those, if you're paying the minimum, either your friends are dumb or you're making a mistake, >> right? And so situationally, based on how the game is going, what turn it is, how much money people have, all sorts of factors, the true value of the power plant is revealed, and you could still overpay and ruin yourself or underpay and win because your friends ruin themselves. But now there's something interesting going on. And it's the game designer isn't at risk of, you know, being like, "Ah crap, I printed an unbalanced game and now I have to do Arata because I put the wrong prices on the power plants." Right? the prices are always it's going to be safe for them. They're not going to have to ban a certain power plant because they put made it too cheap, right? Autobalancing. And the best thing about autobalancing is that in certain games, I guess TCG is another great example. There are situational cards. So, you think about something like I'm really old like circle of protection green, right? in Magic the Gathering, which protects you really strongly from all green things, and you put it in your deck, and your opponent has no green cards, so it's useless. It doesn't do anything for you. And then it's like, okay, but if your opponent was playing like all green cards, suddenly that would be pretty good to have. It wouldn't be useless. And so the value of it might change situationally. An auction mechanic could allow the price to change according to the situation so that it would be cheap when no one needs it and really expensive when it be someone does need it rather than having a locked in price from the game designer and thus always either being too expensive or too cheap, right? Cuz situational. >> Yep. Now you said revealed, but I think it's better to say that the price is collectively decided because it is at your table. If you're playing a game where nobody really understands that one specific power plant is extremely overpowered, then that overpowered power plant doesn't matter that much and you're going to bid some amount. But if one of your friends figures out that one of those power plants is overpowered, then they're going to always bid it up and the p the value of that power plant in your table, your friend group is now going to autocorrect and balance as you play power grid over and over again. So, your own local table is going to selfbalance. Forget the rest of the world. We're just talking about the people you're playing games with, which is probably the people you care about. I don't think many of you are professional power grid players running the international circuit. >> There isn't one. >> So, this is the problem. Now, this is a game called QE, >> quantitative easing. >> This game is a great game. This game is just an auction and you are a sovereign bank. So, you have infinite money. >> Literally infinite money. You can bid any amount. You >> bid for example an entire mouthful of C cucumber ejecta >> or 50 billion or a trillion or you can write any number you want. You have infinite money. >> So in this game you are bidding any amount. And the way the game works is at the end of the whole game you're bidding on things that give you victory points. Whoever has spent the most money is eliminated from the game and then whoever has the most victory points wins. So it's like, yeah, you could win every auction by bidding a trillion, a hajillion, whatever. And then at the end of the game, it's like, well, you bid a hajillion and everyone else is in thousands, so you lose. Now, of course, this game is just an auction. Therefore, if you are good at auctions, you are good at QE. However, there are other games where an auction is just part of it. Almond Ray that we talked about a little while ago, that game is just a series of auctions, but there are other things you do. However, if you play this game among people who are skilled at auctions, the auctions are literally all that matters. The things you do in Aman Ray that are not auctions do not matter at all because every player will play them perfectly or they do not matter compared to the power of the auction in terms of the input of skill into the game. This happens more often than you would expect. Almost any game that has anything other than a non-trivial auction will be about the auction if everyone at the table gets skilled enough. And if one person at the table is better at the auction, they will dominate play forever until someone catches up. Now, we talked about memes earlier and this whole, you know, again, I cannot stress enough, if you want to understand the part of a game that someone cares about, look at the parts of the game that serious expert players joke about, riff on, make memes about, like, where are they strutting and thinking and like doing funny stuff in the middle of the game? And I note that this image from Daniel Through is titled >> how the gods, >> how the gods bid. So, we talked a lot. What therefore is an auction? There is actually a pretty good definition we can come up with. Now, that guy's hard to read. So, we're going to go back to the other guy. >> An auction is I tested this out at a bunch of game designers and I got to the point to where no one could critique it further. >> It's surprisingly hard to find like a definition of an auction that isn't like super academic or whatever. >> Yeah. And we are not super academic. I only have a bachelor's and it's not in this. >> Same. a collective decision, meaning it's not just one player. The group is doing this. Made by motivated players, meaning if you're playing a game that has an auction and you don't understand the game, the auction doesn't matter because you're not going to make meaningful decisions, your input into the auction will effectively be random. >> Yeah. The people participating in the auction have to care, right? Someone is selling or giving away some resource, even if it's just the game, which isn't necessarily a player. And then there are players who want the resource to some extent. If people are just like I don't care about that, it's like they're not >> it's not meaningfully an auction at that point. >> Uh with arbitrary constraints, that's the important part part for game design. That is why auctions are so varied. You can have some crazy auctions and we have a bunch of specific examples we'll talk about at the very end. Uh that results in the allocation of resources, meaning you get something in exchange for the commitment of currency. That is a really long way of saying something simple. We are determining the value of a thing. This is all you need to think about. What is a scub worth to me and to everyone else at the table? >> Right? We don't know what the value of the thing is. We're going to find out by auctioning. >> So, now we're going to go into a denser example. Has anyone played Rainer Kisia's game Modern Art? >> All right. This is a great game. And the thing about this game and why it's a perfect example for this panel is because it's nothing but auctions. It has all kinds of different kinds of auctions. You're basically constantly doing different kinds of auctions for different pieces of artwork. And so perfect game for the auction panel. >> And even better, the mechanic is we're not going to teach you the whole game, but basically the way it works, everyone's going to have a hand of cards that are paintings depending on and every turn when you're the auctioneer, you pick a painting and you put it up for sale. And those symbols on the corner tell you which kind of auction is used for that painting. >> There's a bunch of other mechanics that happen, but the paintings that get sold more are worth more victory points at the end of the game in a moderately complicated fashion that we don't need to explain. So basically, the more a painting of one color gets sold, the more valuable it is. When you are auctioning off a painting, other players pay you money and you keep that money. And at the end of the game, whoever has the most money wins, and the money is just the money you still have, plus the final value of all the paintings that you have at the end of every round. That's basically the whole game. This is in the library, so you can just go play it right after this panel if you get really inspired about auctions. I love this game. Uh I think the art in the new game is not nearly as fun as the old terrible clip art from the original printing. Uh, so basically what we're going to do is walk you through the different kinds of auctions that happen in this game. And I want you to think about something very specific while we talk about these. The painting being auctioned is worth the same amount. >> No matter what kind of auction we use, the actual material value of the painting is effectively identical. The only thing that is changing is the manner in which we sell the painting. And is that going to change the actual final price that is set in the auction? Right, let's find out. >> I have watched people play this game and literally bid more money than they could possibly get back ever, no matter what, >> right? Mathematically, the painting could only ever be worth $30 or whatever and someone in the auction bids like 35 and it's like, go ahead. >> And that's important. Auctions are super hard. valuation. Determining the value of a thing is one of the hardest things to do on earth. It is everyone's bad at it. Like if you think you're bad at auctions, yes, society is bad at auctions. Homminid brains are bad at auctions. Valuation is something you could get a doctorate in and still have no idea how to be better at auctions. >> It is likely that the prevalence of auctions in our society is a contributing factor to income inequality as wealthy people basically rip us all off whenever there's an auction. So, the first kind of auction, let's say I'm auctioning off this red painting here, this uh Christristen P, that is an open auction. >> That's the kind of auction that you imagine at the art house with the paddles and everything. Like, do I hear one? Anybody? >> Do I hear two? You know what? I'll buy it for five. Anyone can out bid me five, six. You're just going to keep you run an auction and you gave it down at the end. $55 for this Kristen P. Going once, going twice, going three times. Sold to Joey Jojo who's about to lose the game because he overpaid. Congratulations. Now, what does this do? This means it is a collective decision where every player has all of most of the available information at the same time. As soon as Scott bids a number, I now know Scott is willing to pay at least that much for that painting. Turn order doesn't matter because anyone can overbid at any time. So, I could hang back, watch everyone else bid around, and then if I decide, you know what, they don't understand how valuable this is. Maybe I'm the last player, and I got a bunch of red cards. I am confident red paintings are going to be worth a lot at the end of the game, and no one else knows that. I might just wait and see what the final price is, and I put in one last bit at the end. >> Now, you might think the strategy in this kind of auction is to just always wait and see, which means everyone would just sit there quietly. And that doesn't happen. And the reason it doesn't happen is because most of the time when you have an open auction, you have a minimum bid of either zero or a small enough number that they know is less than the real value. Right? If you were auctioning off a real van go here for you today and we said, "All right, do I hear $5?" It's like someone eventually is going to be like six, right? Come on. Right? It's going to be in the millions somewhere, right? It's like you it'll get started and it'll go. You don't have to, you know, worry about everyone keeping quiet. So this kind of auction to participate in the auction you must reveal a piece of information that other players did not have before the price of entry to bid is revealing a number you were willing to pay and that implies a lot about what you were thinking about the game. But it also involves a very particular kind of trap. People uh one of the reasons people are bad at auctions is that they get a little emotionally invested. They feel like if they win the auction they win the game. And you know what? If you win the auction, you do not win the game. I remember we used to play with these people up in like Pikipsy a long time ago, and Scott would do this thing to this one guy. Any game we had where there was an auction, this guy would sit there and hem and haw for longer than his >> He was stressing out over the auction. He's like, >> and I'll role play this guy right now. I'll bid 14. >> 15. >> Fast forward like two minutes. I'll bid 17. 18. >> This guy, Scott could force this guy to pay inordinate amounts of money for anything in any game like clockwork, >> right? And the reason that this worked and I was able to do this without fear of him just saying like, "No, I'm good." is because before the auction, I had already decided this is the amount I am willing to pay. And I just decided that and I held on to that. And it's like if he says a number that's less than the number I already decided 20 minutes ago, then I'll just say one more dollar than what he says. And if he says a number higher than the number I thought of at the beginning, then I'll just be like, "Okay, you win." But rather than saying that number first, he's saying the lowest number possible to drive this individual insane. So open auctions are a really fun dynamic thing, but they do at least collectively and with the incremental sharing of information determine the final value of the painting. The advantage of an open auction is that for a buyer, right, if you know what it is worth to you in advance, you could potentially pay less than that if nobody else is willing to pay as much as you, right? The advantage for the seller is that there might be some fool because no one really knows what the price is and they will pay a whole bunch and as a seller you could get mega rich. >> Yep. So, this is a good one for me to use as the seller if I don't know the value of the thing. I'm learning from the other players what they all think it's worth. And I can always jump in with my own bid because this game lets the auctioneer also buy paintings. All right, so I get a very different kind of auction. The once around the once around, I'm the dealer. I put that painting down and then in clockwise order, every player just says a number >> or passes or what? Yeah, a number or passes once. You have one chance to say what you're willing to pay. And after it goes all the way around, as the auctioneer, I get final dibs. I can bid and guarantee it to myself. This is the best auction for the person selling because I get the most possible information from all other players first and then I make the final decision as to whether or not I want it. This auction sucks for the person to the left of the auctioneer because they have to reveal the most information and can be easily outbid by anyone after them. >> Right? You think about the open auction I told you that I started before the auction even began deciding in my mind the most I'm willing to pay. I'm willing to pay $20 for this. Right? If I'm to the left of the person who starts this auction, I what am I going to do? I have to come out and just be like 20 right out of the gate, right? I can't be get a deal like 18 or 19. If I did, I'm risking someone else paying 20, which is still a good deal, at least in my mind. And I don't want to let that happen. I want to make sure that anyone who buys it is going to be paying more than 20, right? because 20 is good and 21 is bad according to whatever math I did. The fixed price auction. This auction is arguably the worst one for the seller. This auction as the auctioneer I name a price. Then we go clockwise and everyone either says yes or no. And if everybody says no, I am obligated to buy the painting at the price I stated. That is it. This reveals the least information of all the possible auctions. It gives me as the seller the least agency and it gives the other players the most agency because once I put myself out there, they get to decide, "Oh, Rim's an idiot. $15. I'm absolutely buying that painting." Or $50. Rim's a moron. He's going to spend $50 and he's already out of the game. I've won because of this. >> Yeah. Think about how difficult it is to be as the seller using this method to just pick the one number. Even this example, if I'm the seller, I don't even have any green cards. I have no idea how valuable green is going to be in the game. I don't know the dynamics. If I put this out there, all these other players got a bunch of green. They're going to rip me off. I'm going to lose. And then the sealed auction, >> my favorite kind. >> This is the most fun one. Everybody puts their bid in their hand and they reveal simultaneously and whoever wins wins, >> right? So this is kind of somewhat fair and fun because the information part nobody learns anything until after it's a done deal, right? It's like afterwards it's like, "Oh, now we see what people have decided the value is." But you don't know anything before you do it. You only know from previous auctions based on how long the game's been going on. And it is the most fair to all the players in this context because nobody gets new information until the auction happens and then everybody gets information they can use for future auctions but it doesn't impact the current auction. This is the auction in this game. This and the open auction where turn order does not matter. In the other two turn order matters a lot. And then the final auction in this game is a weird one. It's a double auction and it is very noteworthy in this game. The double auctions are extremely powerful. You sell two paintings at the same time of the same color. Meaning, not only are you selling two paintings, and not only are you thus going to get as the seller likely twice as much money as you get during an auction of a single painting, but you have practically guaranteed those paintings are worth more victory points at the end of the game because two of them are going to be out. So these you're basically saying these paintings are extremely valuable and I'm selling them together right now. And the entire game, if you play modern art and get good at it, hinges on who manages the handful of double auctions they get to run. Well, >> it's basically like when GameStop forces you to buy a new console in a bundle, right? Same kind of deal. >> So, what's really going on here? Because notice the game the the each painting is worth the same amount. I keep saying it because people forget >> green all the green paintings, no matter what auction was used at the end of the game, are worth the same as all the other green paintings. All the yellows are worth the same as all the other yellows, but because of the different auction types, people end up paying more or less related to the true value. >> But even worse, over the course of the game, if everyone knew the same things, if everyone had the same information >> and everyone was smart, >> then everyone would bid the same amounts every time, >> right? It's like everyone would know. Well, it's already been determined at ended at the end of the game. Green paintings will be worth 15. So, I'm willing to pay up to 14 for any green painting. And now the auction type doesn't matter because we all have all the information. >> But we don't get start with that information. We find that information out in the auctions and different auctions reveal different amounts of information as we go along. Now, there is still a game here, however, because there are many kinds of auctions where every player has access to all information and yet perfect professional players will still bid different amounts because other things could happen. The usually the value of a thing is a little bit of a probability cloud based on how the rest of the game will go. And what players are trying to predict and determine during the course of valuation is how much will this be worth in terms of victory points at the end of the game? And that might change based on decisions other players make. Thus, during the auction, if everyone can see everyone's hands, I'm looking at everyone's hands and thinking, what is Scott going to try to do? If I auction off this painting, what is Scott going to try to do? And there is still a game there, but it is a very different game. And with if information is shared, the differences between these auctions mean a lot less. And that is because this is not an auction game. But there is information in many games is a currency. Just like currencies are currencies. You can have an information economy in a game. Hannib is a great example of this. If anyone's never played Hannib, it's a cooperative game. You're setting off fireworks. It's super cute. I highly recommend you play it. Your goal is to lay out cards in a correct order collectively. And on your and you don't get to see your hand. You're playing with your hand facing everyone else. And on your turn, you either take a card from your hand and throw it away. And if you threw away one you needed, well, you lost. Or you take a card and you play it blindly. You better not have effed up. or you spend a shared resource to tell one other player one thing about their hand. Information is now an action, a currency, a commodity. It is a thing in the game that matters and is material. Auctions are information economies most of the time. The reason auctions act the way they do is that usually the people involved in an auction have different information that is informing their idea of how valuable something is. >> And the same thing plays out in the real world, right? People who win at the stock market have access to market data. They have more information and they get that information faster with faster computers and faster networks before other people and then they make stock trades and take advantage of people who have less information and are slower with their computers. Right? There are people who run casinos who have more information about probability than the fools who go into casinos and then they steal all their money from them. Right? Having more information allows you to win at auctions. Oh, we're going to go buy this house. This house is going up for auction. I know something that's going on in this town. There's going to be a new development. There's going to some something you know that other people don't know. That means the house is worth more or less than other people think it's going to be worth. You either get the house cheap. No. And or you maybe you pay more for that. Something can happen because you have more information and games will replicate this real world phenomenon by making information a material thing in the game that is limited in some way. And whether you realize it or not in a lot of auctions, like we talked about with the open auction, every time you make a bid, you are effectively spending a tiny resource. You have told everyone else an amount of money you're willing to spend on that painting. That is an action you took in the game even though you didn't realize it until just now. Except one of you who's been nodding along from the beginning about all of that. So, two broadly different kinds of auctions exist. Auctions where all players have the same information and auctions where some players have different information from other players. I would argue these are fundamentally different classes of auctions that operate very differently. >> That's why you got the silent auctions often. Yeah. cuz it's a little less stressful for the silent auctions like for charity and stuff. >> So if you are playing in an auction, you're playing a game that has an auction where everyone has access to the same information, the auction is a test of whether or not you sufficiently understand the real value of the thing compared to everybody else. If it's if there is hidden information, then the game is testing how effectively do you manipulate the information economy and act in the face of uncertainty based on the information you have to make good, meaningful, and potentially manipulative decisions about the auction. Two very different ways to engage. So, we said some terms here. I think we should define a few terms. What is a currency? Because we are very clear in an auction you are bidding currency. A dollar in a game like in modern art dollars are the currency. They also happen to be the victory points. But when you're thinking about paintings, the paintings value, you are going to determine that in dollars. Think about here you're at PAX. You go out and get some food down at Pike Place. You are thinking about that food in terms of how many dollars it will cost you to be able to eat. You're not thinking about how many bagels is this pizza worth. You're thinking this bagel is worth X dollars. That pizza is worth X dollars. You're always translating everything back to a currency that has at least a relatively stable value in relation to the other commodities. The value of the currency itself may slowly rise or fall over the course of the game. In a lot of games, money is worth a lot early on because it lets you get goods and services, but toward the end of the game, money is not worth that much because you really want victory points. If you ever play a game called St. Petersburg. This is one of the best demonstrations of that I've ever seen. >> Or Dominion. >> Dominion. So, what is a commodity? There are some auctions where you are bidding commodities as currencies, but that gets really complicated. Commodities have value, but they also do something. What if no one will sell you a peanut even though you have $20? But you need the intrinsic properties of the peanuts. coffee and sugar and things in a board game that you might do something with. Cards that have actions that you're buying out of a market. Baron Nike from the beginning. They have intrinsic properties that engage with the game mechanics. They are not just a currency. Their value is a lot harder to calculate. When people try to think about have difficulty with this, what I like to talk about is gift cards, right? If I have a $20 gift card for Apple, pe most pe I guess there's Apple haters, but most people would find that some value because Apple makes goods and services that are desirable. If I had a $20 gift card for Starbucks, okay, probably similar value. People love coffee. And if I got $20 gift card for a crappy restaurant that has poison food that no one wants to eat at, right? It's still $20 gift card, but will you trade it for the Apple gift card? Probably not. >> Yeah. $20 worth of Apple products or $20 worth of Taco Bell. >> Some people like Taco Bell, but not me, right? For me, I would not trade the Apple gift card for the Taco Bell gift card, but someone else might. And that's the kind of thinking where similar, right, where the dollars, oh, the value is not what dollars are. >> Yep. And thus games get really fun when you are engaging with auctions where you're not just thinking about the value of a currency because there are games where you will have money. You'll use the money to bid on commodities. You use the commodities to do a thing to get victory points. Modern art's really simple because it's the same thing as the currency and the victory point. So what is a victory point? This is the advantage of games over real life. Games aren't real. You can quit a game. You're playing a game for fun. I hope so. Victory points unlike anything in the real world have objective material intrinsic value. We can always calculate the value of something in terms of victory points. And before you say, what about games that don't have victory points? >> Every game has victory points. >> If you squint, you can turn any competitive game, any ortho game into a game that has victory points, >> right? Sports obviously mostly have victory points. It's like, well, what about, I don't know, 100 meter dash. It's like, well, there's time on the clock. You can just say that less time. You're you can say it's a golf score, right? Lower score wins. Less is >> I got less microsconds than you. I won. >> Right. Exactly. Every game has victory points, >> but what about in the real world? Because, you know, auctions happen in the real world. Replace victory points with something far more complex. The intersection of need, desire, and resources, opportunity cost, all those things that make our lives miserable in capitalist hell world. Those things all bundle up together into a victory point, >> right? How many victory points is a roof over my head for two years? Right? It's like, what is that worth? Now, that's not a fun calculation to make. But how many victory points is putting a roof over my agricula family's heads? That's a lot more fun to make that calculation. So, if you're intersecting with auctions, you're trying to determine the values of currencies that may or may not also be commodities. And the only meaningful distinction in a game for victory points other than the fact that they have an intrinsic value is that typically, but not always, victory points are not usable as currencies or commodities. Usually they pop out the side of the game and they tally and that determines who wins. But there are some games where you bid victory points to buy things where you can lose victory points. You can spend victory points. Victory points in very advanced games are often also a currency or a commodity. So, we talked about auctions, but the title of this panel was auctions and bidding. And we haven't we just kept using the word bid. We didn't talk about bidding. There are games that have bidding that are not auctions, right? And usually trick- taking games are the ones where you see the word bid used the most, right? It's like, okay, we're going to play trick- taking game. I'm think I'm going to take five tricks. So, I bid five. It's not an auction. You're distributing resources. Nothing is for sale. Currency isn't going to change hands. What the bid is is simply a commitment. I commit to making five tricks. We use that word for auctions because it's I commit to spending $5. That is what makes auctions different from other mechanisms of distributing resources. You are trade making trading interrogating commitments and then when the auction concludes, you make good on those commitments. One defining characteristic of auctions that I didn't mention in the beginning, they are not continuous in that they will end at some point and have a final result. Now, an entire game might be one auction, but more likely you will do an auction, it ends, and then something else happens in the game. You play the game and push the cubes around and do whatever. So, the commitment occurs during the auction and only during the auction. You'll notice most games have a rule. Almost any game that has an auction will have a rule that says you cannot bid more things than you have. Some games will absolutely let you bid more than you have. And you know what you can do? You can manipulate that market. You can commit financial crimes if games let you do that. But maybe you get caught. There are games. We played a game the other night. If you want to bid more than you have, >> take a loan. >> Yeah, you can. Got to take a loan. Uh, in the real world, if you bid more than you have, you might end up in prison depending on what kind of auction it was. So, how do you be good at auctions? One, now this is one thing you're thinking about is you're trying to figure out how valuable is this thing? And then you're trying to figure out based on everything else going on in the game, how much am I willing to sacrifice to have that thing? Or how much am I willing to sacrifice to have that thing in light of the fact that it also denies it to someone else who might value it more highly. Maybe Scott needs more scub than I do. I need sheep and he needs scub. So in that case, we have different values for the same thing, but I might want to deny him scub, >> right? I look at the thing for sale and I say maybe it's really simple and I know that if I have that thing at the end of the game it'll be worth one victory point for me and I look at the currency and I have to know the valuation of the currency too. I have to value both things and I say well how many currencies is it worth it for one victory point? Okay, well that's the simplest case but then I look and I say wait a minute that's a six and this game gives you points for getting a set of sixes and Rim already has two sixes. If he gets it, he'll get five points, which means fi that's like me losing five points. So if I just lose the auction, I'm losing five. So if I win the auction, that's sort of the same as actually getting six. So how many is how many currencies are six victory points worth? >> Now, we gave a talk at PAX a long time ago. It's on YouTube. It's called play dirty to win. We talk about how to like how to basically make sure no one will ever play games with you again. Not cheating, just playing dirty. And in auctions and in games in general, something you should always think about. Don't worry about everyone at the table. You're probably not at a table where everyone is super good at games. The person who's probably not going to win, don't worry about them. Figure out who is likely to beat you. And you're not just thinking about how much is Scub worth to me. Can I deny that person Scub and therefore win the game. Taking points away from the person who is in second place if you were in first place are just as good as giving points to yourself because you don't care about the people in third place or fourth place. If you do this in games, you might have friends who will notice this and get very angry at you. And we can't play games with people like that anymore. But there's something else. There's, you know, you go on Wikipedia, you can read a lot of dense detail of auction theory if you want to get crazy good. But this is the one that I think is the most interesting. The idea of the winner's curse. By and large, one, people will emotionally invest in auctions and bid more than they needed to anyway. Humans are just like that. Not everyone's going to be a robot playing a game like we are. But two, the way auctions work, most auctions almost always whoever wins the auction will have effectively overpaid for the thing or they feel like they overbid for the thing, right? It's like I bid one, two, three, everyone's raising paddle. I win. I win at 100, right? It's like it's but the second I I beat someone who bid like 98 or something. It's like, "Dang, I could have paid 99." Or it's like, no matter what you pay when you win an auction, you pay the most. You always feel like you paid too much. Even if no, that's what you had to pay if you wanted to win. >> So, as you're playing games, think when you play any game with auctions in it and you want to be good at them, to get better at auctions. This is how I got better. Anytime I win an auction and I immediately feel bad, like I made a mistake, I remember that. And I remember that I definitely overpaid for that compared to everybody else. The bigger the gulf is between me and the second bid under me, that is how I determine my own skill in auctions and I calibrate from there. The second thing I do that Scott mentioned because he also does is I try to calculate in advance how much am I willing to pay and then I stick to that. I don't get heated. I don't get involved in the emotions of the auction. And if everyone else is yelling at each other and they're over my bid, no matter how much I feel like I want to yell, too, I'm just going to sit back and let them make a mistake. >> But turns out you might be able to design auctions for good. Now, on our website, we'll link to these slides if it's hard for you to picture that QR code. In 2020, one of the Nobel prizes went to these two individuals who advanced the field of auction theory because what does Scott say at the beginning of the talk? Auctions have materially impacted human society because auctions are one of the ways we do one of the hardest things to do in the world which is determine the value of a thing in relation to other things. And we live in capitalism. You've seen the world outside. So I don't think we need to dwell on that. But you know what's going on. Uh better designed auctions to allocate resources in the real world could lead to better outcomes in a general sense. They could distribute victory points in the real world more fairly. And the Nobel committee gave them the prize because they came up with some concepts that literally design auctions that make the world a better place. >> Right? Basically, this the problem they were trying to solve was the FCC in the United States sells spectrum. There's only so much, you know, electromagnetic spectrum for frequencies for radio communications. And they were worried if they used any other kind of auction system that either someone would come in and buy all the spectrum and have a monopoly or they would end up having to give away spectrum for like zero dollars due to, you know, collusion and other factors and it would be a problem. So they came up with a not too complicated auction system, these very smart people that prevents both of those things from happening. So we're pretty much at the end, but we do have two minutes and 30 seconds left. So you'll notice this was the end slide, but I have a few bonus slides. We're going to really quickly in a couple minutes talk you through a few specific auctions you should try out and have some fun. >> I think we'll use all two minutes on Mule. >> Mule is a game you should play and if you can't find it, I mean, it's it's findable. There's a more recent game you can get on the Switch called Sumer that has a very similar auction. It's a real-time auction. You're dragging your guy around and it's determining how much you're going to bid. >> Go back to the robots, right? So, you literally if you're the robot on at the start, you choose whether you're going to be on top or bottom. If you're on top, that means you're selling, in this case, energy, right? Auction one energy. If you're on the bottom, that means you want to buy energy. You buy energy with money. And so the robots walk like D. Once the auction starts, if you're at the top, you're going to walk down. And if you're at the bottom, you're going to walk up. And everyone who walks has a little line. And if the lines touch each other, if two robots are horizontally synced, they will begin to exchange goods at the price. If the if the line is higher up when they meet, the price will be higher. If they meet lower, the price will be lower. You can see here the maximum price is 45 and the minimum price is 10. So if the top selling robot comes all the way to the bottom and starts bumping into it, he's basically giving away energy for $10. And if a robot at the bottom walks all the way to the top, they're buying energy for $45 per unit. But you can keep moving. So like you'll bump and like try to run away, right? >> The guy's chasing you. Sometimes two people are running as hard as possible because they need the thing as much as possible. >> And also, how many energies do you want to buy? You might be willing to spend $30 per energy, but you only want five. So, you go up to the 30. You bump five times and then you try to run away so you don't buy anymore. >> And Sumer does it even better because you're basically deciding the auction. You might have two people running as hard as possible to spend as much as possible and then one of them just backs off at the last second or they both try to back off at the last second because they're both dumb. 18C. We do not have time to explain this. If you want to play a train game, you can see how these work. It's a really complicated, weird one. >> Big shot this quickly. >> Yeah. So, the way this works is it's a pretty simple same as power grid, right? Where you're just going around and it's like, yeah, I'll pay one for that set of cubes. I'll pay two for that set of cubes. And the whole game is just auctioning off sets of four cubes. But the value of the cubes changes based on who wins them because whoever wins them places them on the map. So, I might buy Rim's cubes and put them on the map in places where they're worthless. But if Rim buys those cubes, they'll be much more valuable because he'll put them in places where they score victory points and he'll put my cubes in places where they don't. And it's pretty crazy. I hope this was enjoy enjoyable on your Monday of PAX. Yeah. Okay. You don't have to clap. We have run out of time. Uh enjoy the rest of your packs. I recommend going to the Omegathon finale. There is a concert for 30 minutes before the Omegathon finale you should check out in the schedule. Otherwise, I'm Rim. That's Scott. We uh host the Geek Nights podcast. Uh every episode we've done for 20 years is on you on the internet for free. Uh if you go to our website, type that word, grab one of our flyers. You'll find all our other talks, including this one. And uh yeah, >> if you want a $1 sticker that you promise not to vandalize anything with, you can come and receive one >> and email us and tell us about where we're wrong and how you engage with auctions. >> Okay. >> All right. >> I got bad news. >> Huh? >> Record was not pressed. >> Why did you not hit record on your >> I don't know. I car I carried all this I carried this. >> There's a red light on the camera for a reason. See the red light right there? Red light. Red light. Red light. Right. Well, they don't have red lights, but there are professionals back there. >> I carried all this all the way here for nothing. I could have not checked the bag and saved money. >> Didn't need to have two DJ eyes on. >> Didn't even need to have two of these on here.