Jordan’s Last Dance Jersey
Being a basketball fan, the NBA and the level of competition that takes place in the sport is near to my heart. However, it doesn’t take a basketball expert to know that a big part of the popularity of basketball can be attributed to one man: Michael Jordan.
Jordan grew up in North Carolina and went on to play with the Chicago Bulls where he would end up winning 6 NBA championships. His career is cataloged, documented, and well admired. Like myself, his millions of fans want to hold on to a piece of his legacy, and last week Sotheby’s sold one of the jerseys he wore in his final season with the Chicago Bulls (1997-1998).
Like many auctions in the sports and art realm, valuation is incredibly volatile and subjective. The physical asset lacks a consensus in value, and thus one’s personal wealth and passion for an item inflate and deflate value. However, with items that are as memorable as one Jordan’s jerseys, the sheer multitude of bidders along with unpredictable valuations, makes this a very interesting case of auction and game theory.
The Sotheby’s auction was a classic ascending English Auction, a second price auction. This means the jersey sold for the second highest bid + n (n being a nominal value). In classic ascending auctions, the valuation of the item is based on the final sale price and not the valuation that the winning bidder was willing to pay.
It is considered a dominant strategy to bid truthfully in this case. Any choice to bid above your valuation would be a loss; thus, it is not in one’s best action to bid outside of that valuation. The expected revenue in this case is supposed to be the price paid for the jersey. In this case, there might be additional costs associated with the sale including sellers fees, etc.
I might also use this space to compare the results of this auction from that of a Dutch, First Price Auction. In the case of the latter, prices are descending and the “winner” actually is the first one to bid. Although it would be hard to compare what the jersey would have sold for in the alternate model, the English auction gives us insight on the propensity of bidders and their cadence with bidding.
The article doesn’t specify anything about the rounds, how long it lasted, and how contentious the bidding was. However, with more information on those categories, networks experts would get a better understanding about people’s true valuation and the strategies employed.
Source: https://www.wsj.com/articles/michael-jordan-last-dance-jersey-sells-for-record-10-1-million-11663339564?mod=Searchresults_pos4&page=1