Auctions

TinyLVT uses Simultaneous Ascending Auctions (SAAs) to allocate spaces. This format is the gold standard in mechanism design, used for high-stakes allocations like wireless spectrum licenses.

How It Works

All spaces are auctioned together — Prices for all spaces start at each space’s reserve price and rise in parallel
Prices increase in rounds — Each round, minimum bids increase by a fixed increment
Bidders can shift demand — As prices rise, bidders move to less competitive spaces
Auction ends when activity stops — When no new bids are placed, the current high bidders win

This process reveals true demand and achieves efficient allocation: spaces go to those who value them most, and winners pay only what’s needed to outbid others.

Reserve Prices

Each space has a reserve price: the price the first bid is placed at. By default this is zero, but it can be set to any value, positive or negative.

Positive reserves are useful when a space has value even when unallocated. For example, a shared living room normally stays common, but a member can hold an event there if they’re willing to pay enough to compensate the community for losing it. A reserve of $50 means no one takes the space unless someone values it at more than $50.

Negative reserves flip the auction into a chore auction: the winner is compensated rather than charged. Bidding starts at a large negative number (the maximum compensation the community is willing to offer) and rises toward zero as bidders compete to accept less compensation. The space goes to whoever is willing to do it for the least.

Example: Doing dishes for the week has a reserve of -$50. Two members would accept the chore: Alice for $30 compensation, Bob for $20.

Bidding opens at -$50 (Alice and Bob would both happily take that)
Price rises round by round: -$45, -$40, -$35…
At about -$30, Alice drops out (any less compensation isn’t worth it to her)
Bob wins at roughly -$30, receiving $30 in compensation

The result mirrors a normal auction: the winner pays (or receives) about what the second-highest valuation is willing to accept, not their own walk-away price.

Proxy Bidding

Most bidders have simple preferences: “I want one space, here’s what I’d pay for each option.” Rather than watching the auction in real-time, you can set up proxy bidding:

Enter your maximum value for each space you’d accept
Enable proxy bidding for the auction
The system bids automatically, always choosing the space where your surplus (value minus price) is highest

Values for chores are negative. If you’d take a chore for $30 of compensation, enter -$30 as your value. Proxy bidding then chases the space where price is most below your value (i.e. where the compensation still exceeds what you’d accept).

Max items controls how many spaces your proxy will win for you. For resource auctions, this is typically 1 — you rarely need two desks or two rooms. Chores aren’t mutually exclusive in the same way: if you’re willing to do three chores for the right compensation, set max items to 3 and the proxy will pursue the three with the most surplus relative to your values.

Example: You value Desk A at $80 and Desk B at $60. Prices start at $0.

Round 1: Proxy bids on Desk A (surplus: $80 vs $60)
Prices rise to $30: Still bids on Desk A (surplus: $50 vs $30)
Price on Desk A rises to $60: Proxy switches to Desk B (surplus: $20 vs $30)
Prices rise above $80 and $60: You drop out (no positive surplus remaining)

Activity Rules

To prevent last-minute bidding that disrupts price discovery, auctions enforce activity rules. You must actively participate throughout:

Each space has eligibility points
You must bid on enough points each round to maintain eligibility
If you stop bidding, your eligibility decreases permanently

Default configuration: Set all spaces to 1 eligibility point and require 100% eligibility from round 0. This ensures bidders participate every round while allowing them to freely move between spaces as prices rise — ideal when spaces are substitutes (e.g., different desks in an office).

When to use varied eligibility points: If your spaces fall into distinct categories with very different values (e.g., large vs. small rooms), you may want higher eligibility points on premium spaces and a graduated threshold that starts below 100%. This prevents bidders from “parking” on cheap items early and then jumping to expensive ones late in the auction. However, this also restricts legitimate flexibility, so only use it when category-switching would genuinely disrupt price discovery.

The Exposure Problem

Sometimes you want multiple spaces together (e.g., adjacent desks for collaborators). Bidding on items separately creates risk: you might win one but not the other, leaving you with something you didn’t want.

Solution: Bundles. Spaces can be grouped into bundles that are bid on as a unit. If you need two adjacent desks, bid on a two-desk bundle rather than individual desks.

Auction Parameters

When creating an auction, you’ll configure:

Round duration — How long each bidding round lasts
Bid increment — How much prices rise each round
Activity thresholds — How much bidding is required to maintain eligibility

After the Auction

When the auction concludes:

Winners are determined — Highest bidders on each space
Payments are calculated — Based on winning bid amounts
Currency transfers occur — According to your community’s currency mode
Possession begins — At the scheduled start time

Winners can see their allocations immediately. Payment obligations are recorded in the community ledger. For chore auctions (negative winning prices), the flow reverses: the winner is paid rather than charged. Who pays the compensation depends on the currency mode — see Currency Modes for details.

Learn about payment options in Currency Modes.