Business Case Studies & Business Publications

Parity: Auction Design for Non-Fungible ...

Zorc, Saša;Grushka...

Case

Parity: Auction Design for Non-Fungible Tokens

Zorc, Saša; Grushka-Cockayne, Yael; Freeman, Rupert; Kim, K. Dennie; von Hassel, Christian

QA-0997 | Published July 31, 2026 | 7 Pages Case

Collection: Darden School of Business

Product Details

In this case, students are introduced to Bill Shelton, the CEO of Parity, who must choose an auction format for the company’s non-fungible tokens (NFTs). Beyond the familiar auction formats, the case explores two innovations made possible by blockchain technology: the ability of the auctioneer to capture revenue from the secondary market and the use of blockchain tokens as an additional incentive for auction participants. The case is simulation based, with the in-class simulation of the various NFT auction formats absorbing the majority of the class time.

• Give students hands-on experience as auction participants in a variety of formats, so that they encounter common participant errors firsthand and learn how to avoid them. • Surface the trade-offs faced by the auction designer and demonstrate how theoretical results such as the revenue equivalence theorem can fail in practice. • Expose students to new auction formats enabled by emerging technologies (i.e., formats that were not historically feasible to implement). • Build students’ understanding of how behavioral biases shape outcomes in markets for difficult-to-value assets. • Recreate, in class, the market failure observed in the real NFT market and explore its drivers.