Managing Uncertainty and Asymmetric Information in Roman Auctions

Auctions are market structures that allocate rights through a process of price competition in which bidders make offers. The volume of trade and money that auctions generate in modern economies is unparallel in world history. This explains why in recent times they are also relevant in economic theory. Game theory regards auctions as non-cooperational games of incomplete information. Some theoretical studies, informed by fields such as behavioural economics and economic sociology, aim specifically to improve our capacity to predict patterns of behaviour, reduce uncertainty, and, ultimately calculate winning strategies for both bidders and sellers. Despite the unquestionable impact of this research on our better knowledge of the mental and social mechanisms that lead actors’ performances and decision-making in auctions, there is no exact science behind this practice. Incomplete knowledge remains, after all, a distinctive trait of auctions, ancient and modern. In this light, they feature as theatres of uncertainties in which actors engage in multilayered games of asymmetric information. This chapter investigates the impact of dysfunctionalities and asymmetries on Roman auctions. Following a concept coined by Douglass North, the first part of the contribution will discuss the ‘rules of the game’: the enforcement and marketing mechanisms, as well as the social norms that shaped the information systems of Roman auctions. In the second part, the chapter investigates the shadows of this information system. Two specific dysfunctional conspiracies—also typical of modern auctions—will be analysed: the formation of bidding rings or collusions, and shill bidding, a practice that involves the seller and at least one fake-bidder. The aim of the chapter is to demonstrate that ancient Romans had a profound understanding of the complexities and the risks attached to this versatile market structure, which was shaped by both transparency and opacity, and by games of information that did not always match the restrictions imposed by law and morality.