An auction is a process of buying and selling goods or services by offering them up for bidtaking bids, and then buying the item to the highest bidder. The open ascending price auction is arguably the most common form of auction in use today.

In economic theoryan auction may refer to any mechanism or set of trading rules for exchange. In practice, both haggling and sale by set-price have been significantly more common.

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Nonetheless, auctions have a long history, having been recorded as early as B. The auctions began with the woman the auctioneer considered to be the most beautiful and progressed to the least. It was considered illegal to allow a daughter to be sold outside of the auction method.

During the Roman Empirefollowing military victory, Roman soldiers would often drive a spear into the ground around which the spoils of war were left, to be auctioned off. Later slaves, often captured as the "spoils of war", were auctioned in the forum under the sign of the spear, with the proceeds of sale going towards the war effort.

The Romans also used auctions to liquidate the assets of debtors whose property had been confiscated. On March 23 The Praetorian Guard first killed emperor Pertinaxthen offered the empire to the highest bidder.

Didius Julianus outbid everyone else for the price of 6, drachmas per guard, [ citation needed ] an act that initiated a brief civil war. Didius was then beheaded two months later when Septimius Severus conquered Rome. From the end of the Roman Empire to the eighteenth century auctions lost favor in Europe, [8] while they had never been widespread in Asia.

In some parts of England during the seventeenth and eighteenth centuries auction by candle began to be used for the sale of goods and leaseholds. Sometimes, other unpredictable processes, such as a footracewere used in place of the expiration of a candle.

This type of auction was first mentioned in in the records of the House of Lords. Pepys also relates a hint from a highly successful bidder, who had observed that, just before expiring, a candle-wick always flares up slightly: The London Gazette began reporting on the auctioning of artwork at the coffeehouses and taverns of London in the late 17th century. Christie'snow the world's largest auction house, [12] was founded by James Christie in in London [14] and published its first auction catalog inalthough newspaper advertisements of Christie's sales dating from have been found.

By the end of the 18th century, auctions of art works were commonly held in taverns and coffeehouses. These auctions were held daily, and auction catalogs were printed to announce available items. In some cases these catalogs were elaborate works of art themselves, containing considerable detail about the items being auctioned.

At this time, Christie's established a reputation as a leading auction house, taking advantage of London's status as the major centre of the international art trade after the French Revolution. During the American civil war goods seized by armies were sold at auction by the Colonel of the division.

Thus, some of today's auctioneers in the U. The development of the internet, however, has led to a significant rise in the use of auctions as auctioneers can solicit bids via the internet from a wide range of buyers in a much wider range of commodities than was previously practical. Most auction theory revolves around these four "standard" auction types. However, many other types of auctions exist, generally sharing many, including:.

The range of auctions that take place is extremely wide and one can buy almost anything, from a house to an endowment policy and everything in-between. Some of the recent developments have been the use of the Internet both as a means of disseminating information about various auctions and as a vehicle for hosting auctions themselves.

Each type of auction has its specific qualities such as pricing accuracy and time required for preparing and conducting the auction. The number of simultaneous bidders is of critical importance.

Open bidding during an extended period of time with many bidders will result in a final bid that is very close to the true market value. Where there are few bidders and each bidder is allowed only one bid, time is saved, but the winning bid may not reflect the true market value with any degree of accuracy. Of special interest and importance during the actual auction is the time elapsed from the moment that the first bid is revealed to the moment that the final winning bid has become a binding agreement.

Prices are bid by buyers and asked or offered by sellers. Auctions may also differ by the procedure for bidding or asking, as the case may be:. Auctions may differ as to the price at which the item is sold, whether the first best price, the second price, the first unique price or some other. Without modification, auction generally refers to an open, demand auction, with or without a reservation price or reservewith the item sold to the highest bidder.

Auctions are publicly should i buy gps stockholm county privately seen in several contexts and almost anything can be sold at auction. Some typical auction arenas include the following:.

Although less publicly visible, the most economically important auctions are the commodities auctions in which the bidders are businesses even up to corporation level. Examples of this type of auction include:. Katehakis and Puranam provided the first model [62] for the problem of optimal bidding for a firm that in each period procures items to meet a random demand by participating in a finite sequence of auctions.

In this model an item valuation derives from the sale of the acquired items via their demand distribution, sale price, acquisition cost, salvage value and lost sales.

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They established monotonicity properties for the value function and the optimal dynamic bid policy. They is binary option haram ebook provided a model [63] for the case in which the buyer must acquire a fixed number of items either at a fixed buy-it-now price in the open market or by participating in a sequence of auctions.

The objective of the buyer is to minimize his expected total cost for acquiring the fixed number of items. Bid shading is placing a bid indias forex reserves may 2016 is below the bidder's actual value for the item. Such a strategy risks losing the auction, but has the possibility of winning at a low price. Bid shading can also be a strategy to avoid the Winner's curse. This is the practice, especially by high-end art auctioneers, [64] of raising false bids at crucial times in the bidding in order to create the appearance of greater demand or to extend bidding momentum for a work on offer.

To call out these nonexistent bids auctioneers might fix their gaze at a point in the auction room that is difficult for the audience to pin down. In fact, an auctioneer may bid up the price of an item to the reserve price, which is an unstated amount the consignor will not sell the item for. However, the auction house is required to disclose this information. In the United Kingdom this practice is legal on property auctions up to but not including the reserve price, and is forex nonfarm employment trading adp non-farm known as off-the-wall bidding.

Whenever bidders at an auction are aware of the identity of the other bidders there is a risk that they will form a "ring" or "pool" and thus manipulate the auction result, a practice known as collusion.

By agreeing to bid only against outsiders, never against members of the "ring", competition becomes weaker, which may dramatically affect the final price level. After the end of the official auction an unofficial auction may take place among the "ring" members. The difference in price between the two auctions could then be split among the members. This form of a ring was used as a central plot device in the opening episode of the British television series The House of Caradus'For Love or Money', uncovered by Helena Caradus on her return from Paris.

A ring can also be used to increase the price of an auction lot, in which the owner of the object being auctioned may increase competition by taking part in the bidding him or herself, but drop out of the bidding just before the final bid.

In Britain and many other countries, rings and other forms of bidding on one's own object are illegal. This form of a ring was used as a central plot device in an episode of the British television series Lovejoy series 4, episode 3in which the price of a watercolour by the fictional Facebook ipo stock options employee pre Webb is inflated so that others by the same artist could be sold for more than their purchase price.

In an English auction, a dummy bid is a bid made by a should i buy gps stockholm county bidder acting in collusion with the auctioneer or vendor, designed to deceive genuine bidders into paying more. In a first-price auction, a dummy bid is an unfavourable bid designed so as not to become the winning bid. The bidder does not want to win this auction, but he or she wants to make sure to be invited to the next auction. In Australia, a dummy bid shillschill is a criminal offence, but a vendor bid or a co-owner bid below the reserve price is permitted, if clearly declared as such by the auctioneer.

These are all official legal terms in Australia, but may have other meanings elsewhere. A co-owner is one of two or several owners who disagree among themselves.

In Sweden and many other countries there are no legal restrictions, but it will severely hurt the reputation of an auction house that knowingly permits any other bids except genuine bids. If the reserve is not reached this should be clearly declared. In South Africa auctioneers can use their staff or any bidder to raise the price as long as its disclosed before the auction sale.

The Auction Alliance [67] controversy focused on vendor bidding and it was proven to be legal and acceptable in terms of the South African consumer laws. There will usually be an estimate of what price the lot will fetch.

In an ascending open auction it is considered important to get at least a percent increase in the bids from start to finish. To accomplish this, the auctioneer must start the auction by announcing a suggested opening bid SOB that is low enough to be immediately accepted by one of the bidders.

Once there is an opening bid, there will quickly be several other, higher bids submitted. Experienced auctioneers will often select an SOB that is about 45 percent of the lowest estimate.

Thus there is a certain margin of safety to ensure that there will indeed be a lively auction with many bids submitted. Several observations indicate that the lower the SOB, the higher the final winning bid. This is due to the increase in the number of bidders attracted by the low SOB. A chi-squared distribution shows many low bids but few high bids. Bids "show up together"; without several low bids there will not be any high bids. Another approach to choosing an SOB: The auctioneer may achieve good success by asking the expected final sales price for the item, as this method suggests to the potential buyers the item's particular value.

The Journal of Economic Literature JEL classification code for auctions is D From Wikipedia, the free encyclopedia. For the DC Comics supervillain, see Auctioneer comics. For the Andrew Wyeth painting, see Public Sale painting. Walsh A Handy Book Of Curious Information Comprising Strange Happenings in the Life of Men and Animals, Odd Statistics, Extraordinary Phenomena and Out of the Way Facts Concerning the Wonderlands of the Earth.

Retrieved 3 December James Christie conducted the first sale in London on 5 December Retrieved 21 June The effect of clock speed on seller's revenue in Dutch auctions". Measuring emotions in Dutch auctions". International Journal of Electronic Commerce. Retrieved 13 November November"Combinatorial auction design"Management ScienceINFORMS, 49 Wilkinson, The Ebay Price Guide: The Complete Guide for the Individual InvestorOcala, Florida: Atlantic Publishing Company, pp.

Leichman Assoc Pubns, pp. September—October"Online reverse auctions: Common myths versus evolving reality", Business HorizonsKelley School of Business, Indiana University, 50 5: Retrieved 19 January A Balance of Power. Mark; Schnier, Kurt October"Silent auctions in the field and in the laboratory"Economic InquiryOxford, United Kingdom: Western Economic Association International, 43 4: Retrieved 27 January How to Turn Bidders Into Donors".

Retrieved 02 June Check date values in: July"On optimal bidding in sequential procurement auctions"Operations Research LettersINFORMS, 40 4: October"On bidding for a fixed number of items in a sequence of auctions"European Journal of Operational ResearchELSEVIER, 1: Retrieved 8 December Wickman's Fine Wine Auctions.

A framework for emotional bidding". How time pressure and social competition affect bidders arousal and bids in retail auctions".

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