Auction overview

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Auction, Web Based Auctions

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Auction overview

  1. 1. 1. AUCTION OVERVIEW 2. WEB AUCTIONS AND RELATED BUSINESSES
  2. 2. Auction Overview Topics to cover… 1. Origins of Auctions 2. English Auctions 3. Dutch Auctions 4. First-Price Sealed-Bid Auctions 5. Second-Price Sealed-Bid Auctions 6. Open-Outcry Double Auctions 7. Sealed-Bid Double Auctions
  3. 3. What is an Auction? Auction  Seller offers an item or items for sale  Seller doesn’t establish a price  Potential buyers are given information or opportunity to examine it
  4. 4. Auction (cont.) Key Terms  Bids  Private Valuations  Bidders  Auctioneer  Shill Bidders
  5. 5. Origins of Auctions The earliest auctions in 500 B.C Auctions became common activities in 17th century Birth of two British Auction Houses 1. Sotheby’s in 1744 2. Christie’s 1766
  6. 6. English Auctions Bidders publicly announce their successive higher bids until no higher bid is forthcoming. It is also called “Ascending-Price Auction” or “Open Auction (or Open-Outcry Auction)” Minimum bid Reserve Price or Reserve
  7. 7. English Auctions (cont.) Yankee Auctions  Multiple units of an item  Pay the price bid by the lowest successful bidder
  8. 8. English Auctions (cont.) Drawbacks 1. For both sellers and bidders 2. Winner’s Curse
  9. 9. Dutch Auctions Bidding starts at a high price and drops until a bidder accepts the price. It is also called “Descending-Price Auctions” Example of a clock It is often better for the seller
  10. 10. First-Price Sealed-Bid Auctions Bidders submit their bids independently Sharing of information is prohibited The highest bidder wins For multiple items, successive lower bidders are awarded the remaining items at the prices they bid.
  11. 11. Second-Price Sealed-Bid Auctions The highest bidder is awarded the item at the price bid by t he second highest bidder. They are also called “Vickrey Auctions”
  12. 12. Double Auctions Open-Outcry Double Auctions  Offers are shouted by traders standing on the trading pit. Sealed-Bid Double Auctions  Buyers and sellers submit combined price-quantity bids to an auctioneer  Auctioneer matches sellers’ offers to the buyers’ offers
  13. 13. Double Auctions (cont.) Double auctions work well only for items of known quality. Such items can be auctioned without bidders inspection.
  14. 14. Auction Type Key Characteristics English Auction Starting from a low price, bidding increases until no bidder is willing to bid higher. Dutch Auction Starting from a high price, bidding automatically decreases until the bidder accepts the price. First-Price Sealed-Bid Auction Secret bidding process; the highest bidder pays the amount of the highest bid. Second-Price Sealed-Bid Auction (Vickrey Auction) Secret bidding process; the highest bidder pays the amount of the second highest bid. Double Auction (Open-Outcry) Buyers and sellers declare combined price-quantity bids. The auctioneer matches seller offers (lowest to highest) with buyer offers (highest to lowest). Buyers and sellers can modify bids based on knowledge gained from other bids. Double Auction (Sealed-Bid) Buyers and sellers declare combined price-quantity bids. The auctioneer matches seller offers (lowest to highest) with buyer offers (highest to lowest). Buyers and sellers cannot modify their bids.
  15. 15. Web Auctions and Related Businesses Topics to cover… General Consumer Auctions Specialty Consumer Auctions Business-To-Business Auctions Auction Related Services Seller-Bid (Reverse) Auction Group Purchasing Sites
  16. 16. General Consumer Auctions Ebay.com And Truste
  17. 17. Specialty Consumer Auctions CNET.com And Cigarbid.com
  18. 18. Business-To-Business Auctions SmartBargains.com And FastParts.com
  19. 19. Auction-Related Services Escrow.ca And SafeBuyer.com
  20. 20. Seller-Bid (Reverse) Auctions Respond.com And Priceline.com
  21. 21. Group Purchasing Sites letsBuyIt.com
  22. 22. Thanks

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