Understand

Why Use Auctions for Deciding?

Auctions are based on recent research in using market-based mechanisms to evaluate alternatives. It has shown that markets are often the most accurate means of determining the future value of an idea or concept. Auctions rely on the aggregate knowledge, experience, and perspective of diverse people making independent judgments. From these judgments comes the 'Wisdom of Crowds' in which the collective assessment of value is almost always more accurate than any individual's own judgment. Find More

Using Auctions Effectively

Since an Auction efficiently collects and consolidates diverse and tacit knowledge throughout the organization (and beyond) and creates clarity among fuzzy alternatives it can be effectively used to analyze virtually anything. They are especially useful for front-end activities where ideas can be ill-formed or ambiguous and not a lot is 'formally' known. Auctions are best when they can be used on a periodic basis with active idea sources. Find More

What an Auction Reveals

Per Concept - Strike price, Consensus range, Outliers, Number of owners, Number of bidders, Ratio of owners to bidders, Bid range
Per Market - Priority rank of all stock prices, Ranking of stock price variability, Ranking of stock ownership variability
Per Person - Bidder rank, money left on table, % who bid too low and too high, bid distribution, distance from strike price, % in the money, # bids, # successful bids and ratio, how close to others and deviation from final price - per stock and overall Find More

The Auction Mechanism

There are several different types of auctions - First Price, Dutch, Vickery - that each have slightly different mechanisms and outcomes. Any one can be used, but the key is that a bidder be able to make independent assessment of both the risk and the reward potential of a concept. Using both risk and reward assessments, the clearing mechanism calculates the 'price' of each concept and how many 'shares' each bidder receives. A prioritized list of concepts and a bidder ranking list always reveal surprises. Find More

Auctions
vs. Voting
vs. Markets

Auctions are a more sophisticated form of voting and reveal much more information than the relative value of the concepts, such as community consensus and support dynamics. Auctions are also different than markets in that they are a one-time event with the actions of the other bidders hidden. This independence allows individual assessments to be uninfluenced by group dynamics. There is also no 'trading' in the concepts as there is in a market and hence the liquidity is not an issue. Find More