Posted by Dan Thurot
I’m going to go out on a limb and say that most of the best auction games are about managing bid inflation. What’s bid inflation, you might ask? Good question. It’s how the value of a good increases over the course of the game. Think of a popular artist’s work in Modern Art. Early on, that artist was unknown and their paintings weren’t worth much. But as they become more and more popular, the value of their work skyrockets. By the last round, everybody is breaking the bank to nab a single painting.
Here’s the proviso: I didn’t say auction games were about bid inflation. I said they were about managing it. After all, if you’re spending all your money on the most popular artist, your profit margins are probably slim. Everybody has their eye on so-and-so’s latest painting. The cheques practically write themselves. It therefore behooves you to dole out your resources more cleverly. Sometimes it’s the bet on second place that both plays it safe and pays big.
Now imagine a game where your pool of money has no ceiling. You can bid anything. Five dollars, yes. Half a million pounds, why not. Sixty trillion yuan, now you’re talking. Welcome to Q.E.