We finished our recent series on auctions by underscoring that, as important as they are as a mechanism for price discovery and allocating scarce resources, they’re just one of a range of tools that can be utilized to manage, sustain and grow an asset marketplace. Auctions are optimized for the sale of novel or idiosyncratic items available in limited quantities. They’re less suitable for assets that are available in very large quantities or that are functionally interchangeable — that is to say, fungible items.

Simply selling such items at a fixed posted price is one way to allocate such assets…


We have discussed the advantages of auctions and how, when properly designed, auctions can help achieve diverse objectives. But it’s important to remember that auctions are just one out of an array of different mechanisms for vending and distributing goods. And just as there’s no one-size-fits-all format for all auction applications, auctions aren’t always the best or most appropriate allocation mechanism for all goods and all markets. …


In our prior article, we looked at the challenges related to auction design in the context of real-world problems. In this post, we take a deeper dive into the price discovery function of auctions, and explore why classic auction formats don’t always guarantee the most desirable outcomes.

What is price discovery?

We usually don’t spend a lot of time thinking about how the prices we pay for many goods or services are determined. When we go to the grocery store, we simply look at price tags that have been marked by the store’s management and make a casual assessment of whether those prices feel…


In prior posts, we’ve talked about the fundamentals of auctions and how they can be gamed or distorted by external factors. In this post, we’ll take a deeper look at how auctions are designed, and some of the ways that design choices directly shape outcomes.

Those past posts have focused on straightforward auction designs — English auctions (ascending bid), Dutch auctions (descending bid), and sealed (hidden bids) — which are the primordial templates for the much more sophisticated ones that have emerged over the past 20 years. The increasing complexity and power of auctions has been in no small part…


In the first article in this series, we gave an overview of the history and most common forms of auctions. In the second and third articles, we took a look at factors that distort auctions from their most optimal outcomes, due to the unconscious or conscious efforts of buyers and sellers respectively. In this article, we’re bringing this context out into the present-day landscape, focusing on auctions for one of the hottest — and most volatile — asset categories in contemporary art and collectibles, Non-Fungible Tokens.

If you thought you’d never see a hilarious music video explaining Non-Fungible Tokens on…


In our first article in this series, we provided an overview of auctions history and explored some of the most common types of auctions. In the subsequent article, we showed how variance in bidder mindsets and behavior can lead to auctions producing less than optimal results. In this article, we turn our attention to sellers, and the ways that they too can alter auction outcomes in ways that make them less efficient or effective.

We’ve seen how auctions can be made less optimal by buyers — whether because of unconscious mindsets or consciously unfair behavior. But naturally, sellers are equally…


In our first article in this series, we gave an overview of auctions, their history and the critical role they play in our economic and social infrastructure. We also highlighted the fact that not all auctions are conducted the same way, and explored some of the most common types of auctions. In this article, we’ll look at some of the factors that have led auctions to evolve into these divergent forms.

At their simplest, auctions offer a way for sellers and buyers to fairly and dynamically identify a price on which they mutually agree, without the complexity and time consumption…


At Forte, we’re dedicated to creating new economic and creative opportunities for billions of players around the world. To accomplish that, we’re building a community-owned gaming platform using breakthrough technologies and a new business model that presents an opportunity to change the gaming industry forever. And as part of that commitment, we’ve been sharing our research and observations around key principles in economics, how they work in the real world, and how they might work better if rooted in business models that give ownership to all participants — what we call community economics. We want to hear from others who…


We’ve explored how traditional, centralized marketplaces work in the real world — and how and when they don’t work. We’ve also taken a look at how decentralized exchanges, marketplace platforms powered by blockchain technology, address some of the challenges faced by traditional marketplaces, while remaining vulnerable to certain kinds of abuse…at least for now.

But what do marketplaces look like in games? That’s the question that led us to conduct a deep-dive analysis of a sampling of 25 prominent and widely used game marketplaces, in order to better understand the different mechanisms they use, the flaws and potential evident in…


In prior articles, we’ve looked at marketplaces in the real world, how they’re organized, and how — in some cases — they can be abused and exploited by bad actors. All of the marketplace examples we shared are centralized exchanges: Trading takes place on private platforms, owned by operators, who manage those platforms, serve as gatekeepers to market participation and validate (and incentivize) trade activity.

We’ve also discussed how blockchain enables the decentralization of networks (including the Internet itself), by offering a trusted means for transactions to be validated without a governing authority — validation takes place via nodes on…

Forte

Building economic technology for games using blockchain technology.

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