The assumption does not hold when bidders perceive a value of resale, either of the item itself or of a by-product of the item. Buying land for the rights to the oil that lies beneath it would be a good example. In this case, the value is common; that is, individual bids are predicated not only on personal valuation, but also on the valuation of prospective buyers.
Each bidder tries to estimate the value of an object using the same known measurements common values , but their conclusions may vary widely. Absent special information about the item being purchased, the winner is the person with the largest positive error in his valuation, and, unless he is lucky, he will wind up losing money. The second assumption of the revenue equivalence theorem is that all bidders are risk-neutral.
The strict definition of risk neutrality is: given the choice between a guaranteed return r and a gamble with expected return also equal to r, the bidder is completely indifferent. The style of auction a seller chooses depends on his judgment about which of these assumptions holds.
If values are common rather than independent, the English auction yields higher seller revenue than the second-price, sealed-bid auction, which in turn yields higher revenues than the Dutch and first-price, sealed-bid auctions which are tied. The rankings illustrate the strategic advantages of increased information.
Because the English auction reveals all bids to all bidders, it permits dynamic updating of personal valuation. If I see that others believe the real estate is worth more, I too may decide it is worth more. Similar reasoning applies to Dutch descending auctions. While the information is not updated in a second-price sealed-bid format, the winner pays the bid of the next-highest bidder, and so bidders raise bids, secure that they will not be disadvantaged if rival bids are lower.
In fact, in both the first-price, sealed-bid auction and the Dutch auction, no information is revealed and the bidder pays the value of his bid. Therefore, in terms of revenue maximization, it does not matter which of these auctions a seller chooses; nor does it matter whether the bidders have private or common values.
What about the role of risk aversion? In first-price, sealed-bid and Dutch auctions, risk aversion causes bidders to bid slightly higher than they might otherwise.
Since they have only one chance to bid, fear of losing the item induces overbidding. In the English and Vickrey auctions, however, bidders are induced to bid their true valuation, regardless of risk attitudes.
Once a seller has decided on which of the four basic auction forms to use, he can use many variations within the auction to further manipulate the outcome to maximize revenue.
These mechanisms can have profound, and often counterintuitive, effects on bidding behavior—and therefore on outcomes. Among the available mechanisms are reserve prices, entry fees, invited bidders only, closing rules, lot sizes, proxy bidding, bidding increment rules, and postwin payment rules. The U. Federal Communications Commission FCC auctions of wireless bandwidth provide a useful example of both the successes and the failures of auction design.
The auction to allocate Personal Communications Service PCS spectrum had four primary goals: 1 to attain efficient allocation of spectrum, 2 to encourage rapid deployment and network build out, 3 to attain diversity of ownership, and 4 to raise revenue.
Goals 1, 2, and 4 are met by any well-designed auction, as the winner is the one who values the item most. The FCC developed an elaborate network of rules to ensure the desired outcomes. To encourage price discovery, the auction was a multiround, ascending-bid, first-price auction. The many licenses available covered the entire United States, allowing major complementarities and substitutes in this market. To allow bidding that took this into account, the auctions were simultaneous, and no auction ended until they all did every license was open until there were no more bids on any of them.
Further, because the FCC wanted to discourage bidders from sitting on the sidelines until the very end, an activity rule was imposed. FloraHolland Aalsmeer Flower Auction is the largest flower auction in the world today.
The auction is set up so that the price starts high and works its way down. Bidders get only a few seconds to bid on the flowers before they are shipped off to the new owner's business. They have barely been picked before they are on the shelf. This method is perfect for flowers because they have to be sold at any price.
The first sheep arrived in Australia with the First Fleet in , and in the first major wool auction was held in London for the growing colonial export market. In the first regular wool auction was set up in Bourke Street Melbourne.
Sydney and Melbourne were rapidly growing cities during the 19th century and with their flourishing economies came great opportunities for entrepreneurs. Today the auctioning method thrives as a sales method and is used all around the world to sell every sort of commodity from horses, cattle and fish to flowers, furniture, art, antiques, books, cars, collectables, and of course houses.
The list goes on. Being a nation of gamblers, we love the thrill of the chase and the chances and emotions that come with buying at auctions is probably why we have embraced the auctioning method so whole-heartedly. Dutch The price begins high and drops until someone is willing to pay the price, rather than lose to the next bidder.
Auctioneers were using computers, fax machines, cell phones and other technology to make their businesses run faster and more smoothly. Some auctioneers began taking photographs of small auction items and projecting them onto big screens so the crowds could get a closer look at the merchandise.
Auctions burst into cyberspace in the middle of the decade. Many auctioneers today offer both live and online auctions to meet the needs of customers near and far. Technology allows buyers to participate in the sale without even being there. Over the years auctioneering has progressed and changed, and today it remains more popular than ever. Most everything thinkable has been sold by the auction method of marketing: antiques, household items, automobiles, land, livestock, homes, designer dresses, business equipment, and more.
And thanks to professional organizations like the National Auctioneers Association, auctioneers are privy to countless educational opportunities that help them to keep up on the latest technology and learn new business traits.
They network with other auctioneers to exchange ideas and to find ways to continue to meet the growing needs of the American public. NAA auctioneers are also bound by a code of ethics that protects consumers against fraud and unfair business practices. Auctions have been around since the beginning of time because they are a highly efficient and effective business tool — and they meet the needs of the public.
But, they also are fun, entertaining and theatrical. Most people who attend an auction keep wanting to go back again and again. Since its founding in , the mission of the Virginia Auctioneers Association VAA has been to promote the professionalism of auctioneers and auctions through education and technology. It pays to be associated with the VAA.
Education, camaraderie and mentorship. Join Today! Working to promote the professionalism of auctioneers and auctions through education and technology. All Rights Reserved. Site powered by. Contact VAA. Auction History It seems that auctions have touched almost every century, every industry and every nationality. The First Auctions Records handed down from ancient Greek scribes document auctions occurring as far back as B. Opening of Auctions Schools Many auction schools started in the early s in America.
0コメント