> For the complete documentation index, see [llms.txt](https://serotolabs.gitbook.io/tradeclash/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://serotolabs.gitbook.io/tradeclash/getting-started/how-auctions-work.md). # How Auctions Work If you've played the [Quick Start](/tradeclash/getting-started/quick-start.md), you know the rhythm: three streets, sealed bids, reveal. This page explains why the auction is designed the way it is — and where the skill lives. *** ## Sealed Bids, Not Open Outcry Every bid is hidden until the street timer expires. You don't see what others are bidding in real time — you see what they *bid* after the fact. This matters: * No reactive bidding wars. You commit to a number based on your own read. * Bid history from previous streets becomes the primary signal for future streets. * Bluffing is possible. A low Street 1 bid might mean "I don't like this lot" or "I'm sandbagging to buy cheap on Street 3." Open auctions reward speed. Sealed auctions reward judgment. *** ## Information Asymmetry At the start of a lot, every player has different information: * **Your private position**: A fully revealed prediction market position — market, side, entry price, current price, size. Only you see this. * **Category + payout range**: Shared with the table. Tells you the general territory but not the specifics. * **Burn cards**: At least one position is hidden from everyone. Always. As streets progress, information becomes more symmetric: * Street 2 reveals one shared position * Street 3 reveals another * But burn cards stay hidden through the reveal You're never playing with complete information. The question is always: *how much of the gap can I close with what I know?* *** ## Why Three Streets The three-street structure creates a narrative arc for each lot: **Street 1** — Maximum uncertainty. You have one data point (your private position) and a wide payout range. Bids here are largely about conviction and category familiarity. This is where first-place wins at 50% gap reward bold, informed plays. **Street 2** — The turn. A shared position revealed, plus everyone's Street 1 bids on the table. Now you're triangulating: your card, the shared card, and what others think. The 20% first-place win threshold is more achievable here. **Street 3** — Resolution. Two shared positions known, full bid history visible. The math gets tighter. No first-place win — just the highest bid takes it. Conservative players who passed early can still win here. Each street adds information and narrows the range. But burn cards ensure it never collapses to certainty. *** ## First-Place Wins If your bid exceeds the next-highest by a threshold, you win the lot immediately — no waiting for Street 3. | Street | Threshold | Why | | ------ | --------- | ------------------------------------------------------------------------ | | 1 | ≥ 50% gap | Rewards conviction on minimal info. High risk — you barely know the lot. | | 2 | ≥ 20% gap | More information available. Achievable if your private card is strong. | | 3 | None | Standard auction. Highest bid, period. | First-place wins create spectacle. The table watches someone gap by 50% on Street 1, then sweats through the reveal to see if they overpaid. It's the best and worst moment in the game. *** ## The Payout Range Every lot shows a payout range at deal time (e.g., $180–$420). This is the bracketed range of possible values. It's deliberately wide — roughly 2-3x wider than where the trueValue actually sits within it. The range tells you enough to start thinking but not enough to bid confidently. Your private position, shared reveals, and bid history are how you narrow it. *** ## trueValue After the reveal, the lot's actual value is calculated: ``` trueValue = sum of (currentPrice - entry) × size ``` for all 7 positions. **Example**: A lot with 7 positions might have a trueValue of $327. If you won with a bid of $280, your profit is $47. If you bid $390, your loss is $63 — winner's curse. The trueValue is a snapshot. Positions are frozen at curation time. Polymarket prices may have moved since then, but the lot's value is fixed when it's created. *** ## Winner's Curse The term comes from oil lease auctions in the 1970s: the bidder who wins tends to be the one who overestimated the most. In Trade Clash, winner's curse means your bid exceeded the trueValue. You won the lot, but you lost money. It happens when: * You overweight your private position (it was the best card in a weak lot) * You misread bid signals (others were bidding low because they saw weak cards) * You went for a first-place win on Street 1 without enough information Winner's curse is not a bug. It's the cost of aggression. Managing it — knowing when to bid hard and when to pass — is the core skill. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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