Chapter Seventeen Auctions
Chapter Seventeen Auctions
Who Uses Auctions? Owners of art,cars,stamps, machines,mineral rights etc. Q:Why auction?
Who Uses Auctions? Owners of art, cars, stamps, machines, mineral rights etc. Q: Why auction?
Who Uses Auctions? Owners of art,cars,stamps, machines,mineral rights etc. Q:Why auction? A:Because many markets are imperfect and it is hard to discover potential buyers'true valuations of your asset.Auctions help to discover this information
Who Uses Auctions? Owners of art, cars, stamps, machines, mineral rights etc. Q: Why auction? A: Because many markets are imperfect and it is hard to discover potential buyers’ true valuations of your asset. Auctions help to discover this information
Types of Auctions English auction: -bids are public announcements -bid price rises until there are no further bids -highest bid wins -winner pays his bid
Types of Auctions English auction: –bids are public announcements –bid price rises until there are no further bids –highest bid wins –winner pays his bid
Types of Auctions Sealed-bid first-price auction: -bids are private information -bids are made simultaneously -highest bid wins -winner pays his bid
Types of Auctions Sealed-bid first-price auction: –bids are private information –bids are made simultaneously –highest bid wins –winner pays his bid
Types of Auctions Sealed-bid second-price auction: -bids are private information -bids are made simultaneously -highest bidder wins -winner pays second-highest bid -also known as a Vickrey auction
Types of Auctions Sealed-bid second-price auction: –bids are private information –bids are made simultaneously –highest bidder wins –winner pays second-highest bid – also known as a Vickrey auction
Types of Auctions Dutch auction: -auctioneer announces a high bid and then gradually lowers the bid -first buyer to accept wins and pays that price
Types of Auctions Dutch auction: – auctioneer announces a high bid and then gradually lowers the bid – first buyer to accept wins and pays that price
Reserve Price A seller specified bid level below which no sale is made
Reserve Price A seller specified bid level below which no sale is made
Economists'Classification of Auctions Private-value auctions: -every potential buyer knows for sure her own valuation of the item for sale -all these individual valuations are independent of each other
Economists’ Classification of Auctions Private-value auctions: – every potential buyer knows for sure her own valuation of the item for sale – all these individual valuations are independent of each other
Economists'Classification of Auctions Common-value auctions: -item for sale has the same value to every potential buyer potential buyers differ in their own estimates of this common value
Economists’ Classification of Auctions Common-value auctions: – item for sale has the same value to every potential buyer –potential buyers differ in their own estimates of this common value