craschworks

Dutch auctions (1) have the following advantages:

1) Everyone pays the same price.
2) Everyone has an incentive to reveal how much they’re willing and able to pay for a ticket.
3) It’s simple: you just enter in the price you’re willing to pay/ticket, and how many tickets you want.
4) Everyone knows whether they will have a ticket as soon as the auction ends (so that they can start planning).
5) It’s resistant to scalping. (Although, personally, I have no objection to scalping).

How a dutch auction works:

Tickets are filled from highest bid to lowest bid, until all the tickets are claimed. Then everyone pays the price of the lowest winning bid. So bidding higher increases your chances of getting tickets because you’re more likely to place a bid that’s above the threshold bid.

The optimal strategy is to bid the amount that you value the ticket.

So, for example, if a ticket is worth $500 to you, you should bid that much.

If the lowest winning bid (threshold bid) turns out to be $300, then you will only pay $300 (and be happy doing so, as you valued the ticket at $500).

If the threshold is $700, you won’t get a ticket, but that’s okay, because the ticket was only worth $500 to you, and enough people valued the tickets at $700 and above that they consumed the available supply before your bid was filled.

If the threshold turns out to be $500, then you’re right on the cusp, and you were among the lowest winning bidders to get tickets. You just beat out those who only valued the tickets at $499.

If BMORG must make a certain ticket price to be profitable, they can set a reserve price, below which the threshold price can’t fall.

Poor people who can’t pay the threshhold price could be handled by a scholarship program (either formally through BMORG, or informally within camps).

Here’s a sampling of historical uses of Dutch auctions to allocate goods (including tickets):

Google IPO shares:

http://www.nytimes.com/2004/05/10/business/for-google-going-dutch-has-its-rewards-and-its-risks.html?scp=3&sq=dutch+auction&st=nyt

Randal Monroe (of xkcd.com fame) sold his book tour event tickets via a dutch auction:

http://auction-bot.appspot.com/

Bruce Springsteen benefit concert tickets:

http://www.pricingforprofit.com/pricing-strategy-blog/what-do-prices-for-rock-concerts-initial-public.htm

David Friedman has an interesting article about why Dutch auctions
aren’t used to price goods more often:

http://www.daviddfriedman.com/Academic/econ_and_evol_psych/economics_and_evol_psych.html