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Sometimes you take part in an auction because you
genuinely want to: for the excitement, or the social
buzz, or whatever. But sometimes an auction arises
simply because there are two or more people wanting
a single thing. It's commonplace with house purchases,
No one likes that
sort of auction. If you get involved
in one, it's because you have no choice. As far as all
the buyers are concerned, all they want to do is to
buy whatever it is as cheaply as possible, or to know
that someone else was willing to pay more than them.
In other words, instead of actually making the buyers
bid it would suffice for them all to tell a trusted
third party the absolute maximum they're willing to
pay; then the highest bidder would get whatever-it-was
for the second highest offered price, plus some
specified minimum increment. No more psychological
The third party could be a real person (I can imagine
a thriving industry of Auction Arbitrators, if I try
really hard), or a computer using some cryptographic
What g's kind of auction is usually called. It is a relatively recent invention and has some very nice properties. [jutta, Mar 21 2001]
||Baked to charcoal. This is called a 'Sealed Bid' auction.
||Only difference is you get it at your bid, not at the second highest.
||What StarChaser said, but some
variants do give it to you at the
second highest price. (Thanks,
||eBay, the mother of all online
auctions, uses "proxy bidding" to
achieve the same end result.
Mar 21 2001, last modified Mar 22 2001|| |
||...or f bidding altogether and use the "Buy it Now" option.
||Uncreatively, Egnor's class of auction is called a "Second Price auction"; creatively, a "Vickrey" auction, after William S. Vickrey, the nobel-prize winning economist; see link.