Auctions and Baseball Cards: A New Record
Every year, the record price for sports memorabilia seems to be broken. Just 2 weeks ago, a mint-condition Mickey Mantle baseball card from 1952 sold for $12.6 million, breaking the previous record of $9.3 million for Diego Maradona’s “Hand of God” jersey sold just a few months prior. The card was sold through Heritage Auctions, which operates auctions through first price, sealed bids as described by their website. While we typically imagine baseball cards being purchased at garage sales or conventions, it is becoming more common for the rarest and most desirable sports memorabilia to be traded at auction houses. Multimillion-dollar auctions are no longer limited to priceless artworks and sculptures; baseball cards can now be similarly considered.
So why was this baseball card sold for so much money? In a first price, sealed bid format, bids are made in private and the highest bidder buys at his or her price. It is not desirable for a bidder to bid at or above his or her value, as even if it is the winning bid, the payoff will be zero or even negative. Therefore, it is the dominant strategy to bid below your value so that if you win, the payoff will be positive. While it depends on the context of how much below your value you should bid (ie. other bidders), the Mantle auction example shows that the winning bidder should have valued the card at some amount higher than $12.6 million.
After considering this, the underlying question remains: why is a baseball card valued so highly by the winning bidder? The PBS article mentions that sports items are now being considered investment vehicles, similar to rare artworks and artifacts. Investors are now joining baseball card collectors in purchasing memorabilia because they are seen as protected against inflation compared to traditional investments.