There are many, many kinds of auctions.  At eBay, for instance, you can choose from several species.

English Auction is the normal auction at eBay, where everybody can bid as many times as they like over a specific period of time, and the highest bidder gets the item.  Historically, an English auction usually happened before a live audience with an auctioneer, but it can also work as a "silent auction" where bids are written on a sheet of paper, and the highest listed price wins (which is more like what eBay does, with the computer efficiently replacing a sheet of paper).

eBay also allows a form of "Dutch auction" (which others might call a "multi-unit English ascending auction") when several of the same item are being sold.  In this case, there are several winning bidders, and all pay the lowest price that was offered by one of the winning bidders.  A "traditional" Dutch auction is actually somewhat different: the auctioneer begins with a high asking price, which is lowered until a buyer steps forward, or a minimum price is reached.

These types of auctions can be mixed with other parameters.  When a seller doesn't want to sell for less than a particular price, a "reserve" is introduced, under which price you can't submit a bid.  eBay also offers a sort of "fixed price auction" (which I suppose isn't really an auction) via their "Buy it now!" button.  eBay allows the seller to specify a price at which the buyer can end the auction by agreeing to "buy it now." eBay also has a twist on this, called "best offer," where the potential buyer can contact the seller with her own offer.      

Some other kinds of auctions include:

• Sealed-bid first- and second-price auctions:  All bidders simultaneously submit bids so that no bidder knows the bid of any other participant.  In the first-price version, the highest bidder pays the price she submitted.  In the second-price (Vickrey) auction, the winning bidder pays the second-highest bid plus one bidding increment.  An example of this auction is the Google pay-per-click system.
• All-pay auction: In this exotic auction, which is often used to model lobbying or other competitions, all bidders must pay their bids regardless of whether they win.  The seller collects from everyone, and only the highest bidder wins the item.

For even more about auctions, including some interesting history, see this Wikipedia entry.

Domain auctions are typically of the "reserve" type, but how the auction is conducted varies.  Most domains are sold in online auctions.  A few physical world events offer domains in live or "silent" auctions, like those popularized by Moniker.

Categories
Strategy

0 TrackBacks
Listed below are links to blogs that reference this post: Auction Theory: Kinds of Auctions

TrackBack URL for this entry:
http://www.roundtablegroup.com/movabletype/mt-tb.cgi/35

Post a comment