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The main reasoning by the judge seemed to be that a single round sealed bid process is unlikely to maximize the sale price which on it's surface seems pretty ac

by rtkwe 2y ago

The main reasoning by the judge seemed to be that a single round sealed bid process is unlikely to maximize the sale price which on it's surface seems pretty accurate. So long as the families forgoing parts of their judgements is allowed to be part of the bids though any competing bids seem doomed, it's a big war chest they can throw around that's essentially meaningless because they'll never be able to collect it anyways.

JumpCrisscross 2y ago
> main reasoning by the judge seemed to be that a single round sealed bid process is unlikely to maximize the sale price which on it's surface seems pretty accurate Did the judge argue against the single round or the sealed price? Criticising sealed bids is nonsense. The gold-standard auction (Vickrey, or more accurately, VCG) features sealed bids. If the judge is criticising sealed bids at all, The Onion should appeal. Criticising a single-round auction, particularly with two bidders, on the other hand, is valid. > as the families forgoing parts of their judgements is allowed to be part of the bids though any competing bids seem doomed, it's a big war chest they can throw around that's essentially meaningless because they'll never be able to collect it anyways Isn't it also meaningless if the person whose estate they're collecting is bidding against them?
- whimsicalism 2y ago
  multi-round or not, they should still be equivalent in expected revenue to VCG - no?
  - JumpCrisscross 2y ago
    > multi-round or not, they should still be equivalent in expected revenue to VCG - no VCG is second price, so we're already in a sub-optimal regime with a first-price format. (All while illustrating why Vickrey auctions don't work with unsophisictated observers. Could you imagine the shitshow if The Onion won and then didn't have to pay their bid, but Jones's?) Given first price, I don't think the number of rounds is revenue equivalent.
    - whimsicalism 2y ago
      i agree that if we are doing first price it is suboptimal auction
- rtkwe 2y ago
  The exact form of the auction is really really important though. A Vickery auction is single round and sealed but is critically a second price auction so bidder are incentivized to bid their maximum because they will get the second price which wasn't the case in this auction. Without the second price you're trying to bid just enough to outbid the other party/parties which won't maximize bid size. > Isn't it also meaningless if the person whose estate they're collecting is bidding against them? The blatant attempts to move assets out of InfoWars during the bankruptcy is an entirely different story but that money may technically come legally from outside the estate.
  - JumpCrisscross 2y ago
    > exact form of the auction is really really important though Sure. But nobody uses Vickrey because it's impossible to explain to the public why the highest bid wasn't accepted. > Without the second price you're trying to bid just enough to outbid the other party/parties which won't maximize bid size Which is exactly what happens in any single-round first-price format. The only thing an open auction does is facilitate collusion. Let me repeat: for a single-round first-price auction, sealed bids are the only way to go. > that money may technically come legally from outside the estate It may but it doesn't. Jones saying the judge "ruled in our favour" (emphasis mine) sort of gives away the game.
    - jefftk 2y ago
      > nobody uses Vickrey because it's impossible to explain to the public why the highest bid wasn't accepted Google used to use second-price for all their ads, though I think they've stopped: https://support.google.com/adsense/answer/10858748 https://support.google.com/adsense/answer/10858748 (Which I think, sadly, supports your claim around them being confusing)
      - rtkwe 2y ago
        There's a huge one people use all the time without knowing it, eBay is a second price auction too most people just don't use it like one. You can place a huge maximum bid and will only pay the second highest bid plus an increment. It just automatically semi-unseals bids as new bids come in so it looks a lot more like a live outcry auction.
- Taek 2y ago
  I have real world experience with a lot of different auction designs being deployed, including many variations of the VCG auction. The VCG auction is only good in theory. In practice, most people don't know how much they actually value a thing, and when they are trying to play the VCG game they typically underbid and later have deep remorse. That's the most common mistake, but I've seen plenty of other mistakes as well. In other words, VCG auctions tend not to work well because the bidders often don't have a strong enough grasp over game theory nor a deep enough understanding of how valuable an asset is to them, and therefore the VCG usually generates suboptimal outcomes. In my experience, the auction that seems to work the best is the Ebay auction, where you get immediate feedback if you underbid, but you aren't allowed to see how high the other person is willing to go. Instead, you have to talk yourself into taking a risk on being left holding the bag if you choose to push the price up.
  - JumpCrisscross 2y ago
    > VCG auctions tend not to work well because the bidders often don't have a strong enough grasp over game theory nor a deep enough understanding of how valuable an asset is to them, and therefore the VCG usually generates suboptimal outcomes May I hazard a guess that you worked on low-value recurring auctions? You're describing unsophisticated bidders unwilling to expend search costs. For them, yes, "the seller has an interest in providing participants with as much information as possible about the object’s value" both before bidding starts and during it, the latter due to the impact to bids being less than the overcoming of search costs. > the auction that seems to work the best is the Ebay auction, where you get immediate feedback if you underbid, but you aren't allowed to see how high the other person is willing to go Another comment highlights why this doesn't work for high-value items [2]. (They also assume bona fide bids, which isn't a problem if you can filter out shill bids.) [1] https://www.nobelprize.org/prizes/economic-sciences/2020/popular-information/ https://www.nobelprize.org/prizes/economic-sciences/2020/pop... [2] https://news.ycombinator.com/item?id=42389681 https://news.ycombinator.com/item?id=42389681
    - Taek 2y ago
      > May I hazard a guess that you worked on low-value recurring auctions? It varies. In all cases, the value was below $20,000, in many cases the auction was non-recurring and >$1,000 (for example, specific web domains). I've seen enough smart people fumble a $1,000+ VCG auction that I'd be nervous to assume bidding would be any better at $100 million. I've also seen enough investors fumble $10m+ investment deals (not auctions though) to feel comfortable asserting that a higher value auction does not necessarily imply that the participants will be better at auction theory.
- shkkmo 2y ago
  > “It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added. So it sounds like the judge specifically had issues with the use of sealed bids.
HWR_14 2y ago
I thought the other reason was that some creditors were trying to use their debt forgiveness as a credit to purchase inforwars. Which obviously doesn't make sense in a bankruptcy, since the whole point is the creditors are not going to get paid back 100%.
- rtkwe 2y ago
  Certain creditors giving up some of their claim can shift more money to other creditors effectively increasing the amount paid out by the estate, thereby satisfying more creditors so it's completely kosher just slightly odd. It's unusual because most companies are just companies and the creditors have less/no emotional investment in anything other than receiving the maximum amount of money from the bankruptcy.
  - sidewndr46 2y ago
    I don't see what emotions have to do with it. If a business has a claim for $28 million in debt against a bankrupt company with near zero cash, I could easily see them saying "we'll bid the full $28 million for the asset X". Presumably the asset X has some non-zero value. Even if comically low (like a single small office building), collecting the value of that asset is much better than $0.
    - rtkwe 2y ago
      Emotions come into it where some creditors are willing to forgo their portion of the sale proceeds for a particular outcome. That counts as the bid satisfying some portion of the debt and now other creditors potentially get more money from the bankruptcy. The law allows for this, banks do it all the time on foreclosure auctions splashing the bids with their outstanding loan amount making it unprofitable for others to bid and winning the house they can then sell in a regular manner.
    - HWR_14 2y ago
      The issue is when $50 million is owed and some of the debtors offer to give up their $28 million dollar claim for the building. But then there is no cash for the other debtors with a $22 million dollar claim. As opposed to selling the building for $1 million cash and everyone getting 2% of what they are owed.
tomrod 2y ago
A lot of economic and legal theory beg to differ!
- rtkwe 2y ago
  Beg to differ about what and how?
jillyboel 2y ago
Why does the judge care about maximizing the value for a convicted criminal?
- rtkwe 2y ago
  It's the value that goes to the creditors in the bankruptcy and is the legal requirement for the bankruptcy process. Jones gets none of this money he doesn't own InfoWars since he entered the bankruptcy process.

by rtkwe 2y ago

JumpCrisscross 2y ago

> main reasoning by the judge seemed to be that a single round sealed bid process is unlikely to maximize the sale price which on it's surface seems pretty accurate Did the judge argue against the single round or the sealed price? Criticising sealed bids is nonsense. The gold-standard auction (Vickrey, or more accurately, VCG) features sealed bids. If the judge is criticising sealed bids at all, The Onion should appeal. Criticising a single-round auction, particularly with two bidders, on the other hand, is valid. > as the families forgoing parts of their judgements is allowed to be part of the bids though any competing bids seem doomed, it's a big war chest they can throw around that's essentially meaningless because they'll never be able to collect it anyways Isn't it also meaningless if the person whose estate they're collecting is bidding against them?

whimsicalism 2y ago
multi-round or not, they should still be equivalent in expected revenue to VCG - no?
- JumpCrisscross 2y ago
  > multi-round or not, they should still be equivalent in expected revenue to VCG - no VCG is second price, so we're already in a sub-optimal regime with a first-price format. (All while illustrating why Vickrey auctions don't work with unsophisictated observers. Could you imagine the shitshow if The Onion won and then didn't have to pay their bid, but Jones's?) Given first price, I don't think the number of rounds is revenue equivalent.
  - whimsicalism 2y ago
    i agree that if we are doing first price it is suboptimal auction
rtkwe 2y ago
The exact form of the auction is really really important though. A Vickery auction is single round and sealed but is critically a second price auction so bidder are incentivized to bid their maximum because they will get the second price which wasn't the case in this auction. Without the second price you're trying to bid just enough to outbid the other party/parties which won't maximize bid size. > Isn't it also meaningless if the person whose estate they're collecting is bidding against them? The blatant attempts to move assets out of InfoWars during the bankruptcy is an entirely different story but that money may technically come legally from outside the estate.
- JumpCrisscross 2y ago
  > exact form of the auction is really really important though Sure. But nobody uses Vickrey because it's impossible to explain to the public why the highest bid wasn't accepted. > Without the second price you're trying to bid just enough to outbid the other party/parties which won't maximize bid size Which is exactly what happens in any single-round first-price format. The only thing an open auction does is facilitate collusion. Let me repeat: for a single-round first-price auction, sealed bids are the only way to go. > that money may technically come legally from outside the estate It may but it doesn't. Jones saying the judge "ruled in our favour" (emphasis mine) sort of gives away the game.
  - jefftk 2y ago
    > nobody uses Vickrey because it's impossible to explain to the public why the highest bid wasn't accepted Google used to use second-price for all their ads, though I think they've stopped: https://support.google.com/adsense/answer/10858748 https://support.google.com/adsense/answer/10858748 (Which I think, sadly, supports your claim around them being confusing)
    - rtkwe 2y ago
      There's a huge one people use all the time without knowing it, eBay is a second price auction too most people just don't use it like one. You can place a huge maximum bid and will only pay the second highest bid plus an increment. It just automatically semi-unseals bids as new bids come in so it looks a lot more like a live outcry auction.
Taek 2y ago
I have real world experience with a lot of different auction designs being deployed, including many variations of the VCG auction. The VCG auction is only good in theory. In practice, most people don't know how much they actually value a thing, and when they are trying to play the VCG game they typically underbid and later have deep remorse. That's the most common mistake, but I've seen plenty of other mistakes as well. In other words, VCG auctions tend not to work well because the bidders often don't have a strong enough grasp over game theory nor a deep enough understanding of how valuable an asset is to them, and therefore the VCG usually generates suboptimal outcomes. In my experience, the auction that seems to work the best is the Ebay auction, where you get immediate feedback if you underbid, but you aren't allowed to see how high the other person is willing to go. Instead, you have to talk yourself into taking a risk on being left holding the bag if you choose to push the price up.
- JumpCrisscross 2y ago
  > VCG auctions tend not to work well because the bidders often don't have a strong enough grasp over game theory nor a deep enough understanding of how valuable an asset is to them, and therefore the VCG usually generates suboptimal outcomes May I hazard a guess that you worked on low-value recurring auctions? You're describing unsophisticated bidders unwilling to expend search costs. For them, yes, "the seller has an interest in providing participants with as much information as possible about the object’s value" both before bidding starts and during it, the latter due to the impact to bids being less than the overcoming of search costs. > the auction that seems to work the best is the Ebay auction, where you get immediate feedback if you underbid, but you aren't allowed to see how high the other person is willing to go Another comment highlights why this doesn't work for high-value items [2]. (They also assume bona fide bids, which isn't a problem if you can filter out shill bids.) [1] https://www.nobelprize.org/prizes/economic-sciences/2020/popular-information/ https://www.nobelprize.org/prizes/economic-sciences/2020/pop... [2] https://news.ycombinator.com/item?id=42389681 https://news.ycombinator.com/item?id=42389681
  - Taek 2y ago
    > May I hazard a guess that you worked on low-value recurring auctions? It varies. In all cases, the value was below $20,000, in many cases the auction was non-recurring and >$1,000 (for example, specific web domains). I've seen enough smart people fumble a $1,000+ VCG auction that I'd be nervous to assume bidding would be any better at $100 million. I've also seen enough investors fumble $10m+ investment deals (not auctions though) to feel comfortable asserting that a higher value auction does not necessarily imply that the participants will be better at auction theory.
shkkmo 2y ago
> “It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added. So it sounds like the judge specifically had issues with the use of sealed bids.

HWR_14 2y ago

I thought the other reason was that some creditors were trying to use their debt forgiveness as a credit to purchase inforwars. Which obviously doesn't make sense in a bankruptcy, since the whole point is the creditors are not going to get paid back 100%.

rtkwe 2y ago
Certain creditors giving up some of their claim can shift more money to other creditors effectively increasing the amount paid out by the estate, thereby satisfying more creditors so it's completely kosher just slightly odd. It's unusual because most companies are just companies and the creditors have less/no emotional investment in anything other than receiving the maximum amount of money from the bankruptcy.
- sidewndr46 2y ago
  I don't see what emotions have to do with it. If a business has a claim for $28 million in debt against a bankrupt company with near zero cash, I could easily see them saying "we'll bid the full $28 million for the asset X". Presumably the asset X has some non-zero value. Even if comically low (like a single small office building), collecting the value of that asset is much better than $0.
  - rtkwe 2y ago
    Emotions come into it where some creditors are willing to forgo their portion of the sale proceeds for a particular outcome. That counts as the bid satisfying some portion of the debt and now other creditors potentially get more money from the bankruptcy. The law allows for this, banks do it all the time on foreclosure auctions splashing the bids with their outstanding loan amount making it unprofitable for others to bid and winning the house they can then sell in a regular manner.
  - HWR_14 2y ago
    The issue is when $50 million is owed and some of the debtors offer to give up their $28 million dollar claim for the building. But then there is no cash for the other debtors with a $22 million dollar claim. As opposed to selling the building for $1 million cash and everyone getting 2% of what they are owed.

tomrod 2y ago

A lot of economic and legal theory beg to differ!

rtkwe 2y ago
Beg to differ about what and how?

jillyboel 2y ago

Why does the judge care about maximizing the value for a convicted criminal?

rtkwe 2y ago
It's the value that goes to the creditors in the bankruptcy and is the legal requirement for the bankruptcy process. Jones gets none of this money he doesn't own InfoWars since he entered the bankruptcy process.