Friday 24 May 2019

How to avoid scalpers?

Many popular concerts, games (football matches) and other kinds of events attract scalpers and tickets are often sold out in minutes or even seconds after they are made available. Such thing is very annoying to those who truly want to get the tickets and need to buy from scalpers at much higher prices. Is there a system that can prevent scalpers from buying too many tickets?
I think that there is a way, which is auction. Normally these events want to be fair, so they sell all their tickets once at constant prices, whether or not people can buy these tickets depends on how fast they can reach out to the tickets. However, scalpers do have faster access to these tickets (for example, specialised software), then scalpers have their profitable opportunities in such system. If we have an auction system, the people who value the tickets the highest will get the tickets and obviously scalpers are not those who value the tickets high (otherwise, they will not re-sell their tickets). However, this may be time consuming, when the number of tickets is relatively large. Therefore, the auction I propose is an all-pay auction, for example, if there are 1000 tickets, the 1000 bidders who place the highest bids will get the tickets. In an all-pay auction, all people who place their bids will pay despite whether they are losers or winners. Because people are risk averse, they will not place any bid which is higher than their expected returns. Moreover, it is reasonable to assume scalpers are more risk averse than true fans are, because they are doing business, then it is very likely for true fans to place higher bids than scalpers if scalpers also bid for tickets. Then after several events scalpers will disappear as they are not possible to get tickets.
However, there is a potential risk that all-pay auctions are not a straightforward system which requires some learning process, this can give opportunities to scalpers when this system is first adapted. Once people are more familiar with the system, there will much fewer opportunities left for scalpers.

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