In short, game theory strikes again: lazy auctioneers bid high blindly and hope that others will do the actual research to set the end price fairly, but those others have less incentive to do research because they are getting priced out by the lazy bums anyways. Another problem is that some bidders irrationally assume that a more popular stock is more valuable, so they too contribute to overpricing. As a result, sophisticated investors are staying away from auctions.
In short, game theory strikes again: lazy auctioneers bid high blindly and hope that others will do the actual research to set the end price fairly, but those others have less incentive to do research because they are getting priced out by the lazy bums anyways. Another problem is that some bidders irrationally assume that a more popular stock is more valuable, so they too contribute to overpricing. As a result, sophisticated investors are staying away from auctions.