Professional Documents
Culture Documents
Auctions
Bucharest, 2014-2015
Table of Contents
Introduction................................................................................................................ 4
Auction....................................................................................................................... 5
Introduction
Auctions are a public sale in which goods or property is sold to the
highest bidder. However, depending on the type of auction all bidders will
pay even if only one wins or the starting price is extremely high decreasing
with time.
Auctions have become very popular in recent years. Many public
institutions have appealed to this method to assign different projects to
companies like designing an IT infrastructure for a certain part of the
system or assigning the construction of a high way. Throughout the history,
auctions have been a relatively uncommon way to negotiate the exchange of
goods and commodities. The development of internet 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.
In 2008, the National Auctioneers Association reported that the gross
revenue of the auction industry for that year was approximately $ 268.4
billion, with the fastest growing sectors being agricultural, machinery and
equipment auctions and residential real estate auctions.
Although the appearance of Internet has made auctions easier, wider
and simpler to access, there has been reported an increase number in
cheaters. Both in traditional and online ways, several strategies have been
developed to decrease the risk of paying a much higher price than it is
actually worth the item.
The question that arises is: isnt selling at an auction a gamble? There
is always a risk involved in anything we do, much more in selling an item.
There are several things to remember when participating at auctions
regardless of the type of role played. First would be that at auctions people
do not sell sentimental value items and buyers buy because they collect,
need or the item is a good deal. Second is many items sell very high at
auction and others dont but in the long term the items balance out. Thirdly
selling an item in good order will have a better price. And lastly most
auctioneers have a very good idea about the products worth.
For this paper, I will design an auction which takes place in an
organized environment. The auction has charitable purposes. Therefore,
items that are of public interest will be sold to attract more money for the
cause. Also, all the users of the auction will be registered prior to the event
and this will be the only way to bid for a product. The method is used for
fi(.) is a continuous function on [ai, bi]. Fi : [ai, bi] -> [0,1] will denote
the cumulative distribution function corresponding to the density f i(.) so
that
ti
Fi(ti) =
fi ( si ) dsi
ai
So, Fi(ti) is the sellers assement of the probability that bidder I has a
value estimate of ti or less. We let T denote the set of all possible
combinations of bidders value estimates.
T = [a1, b1] x x [an,bn]
For any bidder I, we let T-i denote the set of all possible combinations
of value estimates which might be held by bidders other than i, so that
T-i= X [aj, bj], j N , j != i
We will further assume that the values estimates of the n bidders are
stochastically independent random variables. Thus, the joint density
function on T for the vector t = (t1.tn) of individual value estimates is
f(t) =
fj(tj)
je N
fj(tj)
je N
The sellers personal value estimate for the object, if he were to keep
it and not sell it to any of the n bidders will be denoted as t0. We assume
that the seller has no private information about the object and t0 is known
to all bidders. There are two general reason why one bidders value
estimates may be unknown to the seller and the other bidders. The bidders
personal preferences might be unknown to the other agents. The bidder
might have some special information about the intrinsic quality of the
object. These factors can be noted as preference uncertainty and quality
uncertainty and the distinction is important.
Bidding on item
By bidding, the bidder is stating he is ready and has the willingness to
buy the acorn for that bid amount, plus any contractual disclosures on the
contract. If the final bid does not meet the requirement, the seller has no
obligation to sell. Except that case, the seller is entering a contract with the
highest bidder to sell the item. The buyer is obliged to deliver payment
within the contractual time specified.
Resolving disputes
Auction members are expected to conduct business with ethics and
honor system in their minds. All members in good have a rating to show
their integrity and if they have followed through with any commitments they
have made. But sometimes misleading may occur; procedural mistakes or
miscommunication can lead to (unwanted) disputes.
Disputes are resolved among the two involved parties and are not the
responsibility of the auction. Bigger or legal disputes must be resolved in
courts.
If the price goes higher than the estimate, we can question the highest
bidders and charge them with the fraud accusation. A third method is to
impose a maximum limit price that can be charged for given goods.
Bibliography/Sitography
1. http://www.eecs.harvard.edu/~parkes/cs286r/spring07/papers/myerson
.pdf accessed on January 7th, 2015
2. https://www.cs.purdue.edu/homes/bb/shillCounteractingbidding.pdf
accessed on January 6th, 2015
3. http://robotics.stanford.edu/~shoham/www%20papers/cheatingauctions-dss.pdf accessed on January 6th, 2015
4. What really matters in auction design by Paul Klemperer, August
2001
5. http://en.wikipedia.org/wiki/Price_gouging accessed on January 8th
2015