New Auction App debuting in Major Sports Arenas
http://www.venuestoday.com/news/detail/inaugural-dropit-auction-debuts-in-phoenix
There has been a recent burst in popularity over a New Zealand based app called Dropit which is an app that connects fans to a live auction taking place during half time or at some point during sporting events. It gives the fans a chance to get involved during the down times of a sporting event and adds a certain excitement to what is usually a down point during the event. Because the Dutch auction is strategically equivalent to a first priced sealed bid auction it is the dominant strategy for every fan participating to slightly shade down from their true value for the object, theoretically this could lead to DropIt losing money on these auctions.
In application however, Dropit is usually able to gain economic value off of these auctions (in addition to contracting revenue generated through the sporting arenas). This is most likely because of the massive amount of participants in the auction. By making it free to participate and putting the auction live on the big screen of the stadium DropIt is able to capture everyone as a potential bidder. The Talking Stick Resort Arena where the Phoenix Suns play has a capacity of 18,500 people who are potentially all engaged with this auction. With a combination of such a large amount of competitors and the excitement of the moment it is likely that fans in the arena will be prone to straying from their dominant strategy and end up bidding their true value or even over their true value for the item.
In this first opening auction for the Phoenix Suns game this season DropIt auctioned off a Suns fan package including court side seats and a private tour of the stadium. The auctions only last a minute and the opening set price was 3,000 (a value much higher than court side tickets to see the Suns and whatever other items were included in the package). DropIt set a record with this auction as it ended only 3 seconds in to the 60 second timer with the auction being won at 2,880. This perfectly illustrates normal people that become willing to stray away from what should be their dominant strategy when the right environment is present.