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Auction

An auction is an economic mechanism in which prospective buyers compete by submitting bids to acquire goods, services, or rights, with the highest bidder typically prevailing and the process determining a market-clearing price.^[1] Auctions originated in ancient civilizations, with the earliest documented instances around 500 BC in Babylon for marriage markets and in Greece for property sales, later adopted by Romans for liquidating estates and war spoils.^[2] Key formats include the ascending-bid English auction, descending-bid Dutch auction, first-price sealed-bid auction, and second-price Vickrey auction, each designed to elicit valuations under varying information conditions and strategic incentives.^[1] Widely applied in art markets, livestock sales, government procurement of radio spectrum, and privatization of state assets, auctions promote efficient resource allocation by revealing private information about value, though they can suffer from issues like bidder collusion or the winner's curse where overestimation leads to losses.^[3] Theoretical advancements, including revenue equivalence across formats under ideal assumptions and optimal design for complex settings, earned Paul Milgrom and Robert Wilson the 2020 Nobel Prize in Economics for improving auction outcomes in practical scenarios like telecommunications licensing.^[3]

Etymology and Terminology

Origins of the Term

The word "auction" derives from the Latin auctiō, denoting "a sale by increasing bids" or "an augmentation," reflecting the mechanism of progressively higher offers in a public sale.^[4] This term stems from auctus, the past participle of the verb augēre, meaning "to increase" or "to augment," which underscores the core dynamic of escalating bids to determine the final price.^[5] The Latin root captures the competitive essence distinguishing auctions from fixed-price sales or tenders, where bids rise incrementally until no further increases occur, rather than negotiating downward or accepting predetermined offers.^[4] Roman usage of auctiō dates to at least the 2nd century BCE, associated with public sales of goods, estates, or spoils, though the term's linguistic formation predates specific documented practices and emphasizes the "increasing" process inherent to the format.^[4] While auctions appeared in ancient Greek contexts as early as 500 BCE—described by Herodotus without the Latin nomenclature—the English term does not derive directly from Greek auktion (a later transliteration) but traces through Latin influences, bypassing Old French equivalents like enchères for the borrowed form.^[5] The term entered English in the late 16th century, with the earliest recorded noun use in 1595, initially referring to a public sale conducted by an auctioneer amid rising bids.^[5] This adoption preserved the Latin emphasis on augmentation, differentiating "auction" from broader terms like "sale" (from Latin salēs, implying exchange without competition) or "tender" (focused on submissions rather than open escalation).^[4] By formalizing the bidding-up mechanism in nomenclature, auctiō and its English successor highlighted causal realism in pricing: value emerges from revealed bidder valuations via iterative increases, not arbitrary assignment.^[5] Hammer price refers to the highest bid amount accepted by the auctioneer at the moment the hammer falls, excluding any buyer's premium or additional fees.^[6]^[7] Bid increment denotes the minimum required increase over the current bid for a new bid to be valid, set by the auctioneer to control bidding pace and often scaled by item value.^[7]^[8] Proxy bid, also known as an absentee or maximum bid, is an instruction given to the auction house to bid on behalf of an absent bidder up to a specified limit, with the auctioneer advancing bids in increments against competing bids until the limit or winning the lot.^[9] An absolute auction sells the item to the highest bidder without a reserve price, ensuring the property transfers regardless of the final amount.^[10] In contrast, a reserve auction includes a confidential minimum reserve price set by the seller; if bids fail to reach it, the item remains unsold.^[11] Walkthrough describes the pre-auction inspection period allowing potential bidders to examine lots in person, typically held at the venue prior to the sale.^[7] In digital auction contexts, dynamic pricing involves real-time price adjustments driven by bidder competition, where the final price emerges from ongoing bids rather than a fixed starting point.^[12]

Historical Development

Ancient Origins and Classical Antiquity

The earliest documented auctions occurred in ancient Babylon around 500 BCE, as recorded by the Greek historian Herodotus in his Histories (1.196), where communities annually assembled marriageable maidens for public sale. The most attractive women were auctioned first to wealthy bidders, with proceeds funding dowries for the less desirable ones, who were then given to suitors willing to accept compensation rather than pay.^[13] This process, described as a former custom by Herodotus (writing c. 440 BCE), enabled resource allocation—pairing brides with husbands—through competitive bidding, where prices reflected bidder valuations and ensured broader matching without direct coercion beyond societal norms.^[14] In Greek city-states, particularly Athens from the 5th century BCE, auctions served as mechanisms for assigning public resources and contracts, evidenced by poletai inscriptions detailing sales of confiscated properties, leases of sacred lands, and rights to tax collection or mining operations. These open bids allocated opportunities to the highest-valued users, as seen in surviving stele records of rental auctions for estates, where the process maximized revenue for the polis while facilitating voluntary participation by potential lessees.^[15] ^[16] Such practices demonstrated early price discovery via ascending bids, predating rigid administrative pricing and allowing empirical adjustment to demand for public assets like temple lands or quarries. Roman auctions, termed auctio from the concept of bidding increments (auctus), emerged during the Republic (c. 509–27 BCE) for disposing of war spoils, estate goods, and slaves captured in conquests, with sales often signaled by a spear (hasta) planted at the site. By the 3rd–2nd centuries BCE, following territorial expansions, these became routine for liquidating assets efficiently, as soldiers and officials sold plundered items or debtor properties to the highest bidder in forums, prioritizing rapid exchange over fixed valuations.^[17] This format highlighted auctions' role in voluntary transfer amid conquest-driven supply, with records indicating widespread use for slaves and commodities by the late Republic.^[2]

Medieval and Early Modern Periods

Auctions saw limited application during the medieval period in Europe, primarily for disposing of seized goods or ecclesiastical properties, though systematic records remain scarce due to the dominance of feudal land-based exchanges over liquid markets. Candle auctions, where bidding ceased upon a candle's extinguishing to prevent last-second bids, emerged as a rudimentary format in England by the late Middle Ages, reflecting early efforts to ensure fairness in perishable or contested sales without fixed prices.^[18] This method persisted sporadically but did not drive widespread commercial adoption amid guild-regulated trade and manorial economies. The early modern period marked a revival, propelled by expanding Atlantic and Asian trade networks under mercantilist policies, which favored auctions for rapidly pricing commodities and estates amid rising merchant capital. In the Dutch Republic, the Vereenigde Oost-Indische Compagnie (VOC) pioneered regular auctions for imported spices and, from 1662, coffee—the first European coffee auction held in Amsterdam following shipments via Mocha—facilitating efficient distribution without royal monopolies and enabling liquidity for reinvestment in voyages.^[19] Amsterdam's broker auctions extended to damaged silks and second-hand goods, supporting a secondary market that recycled trade surpluses and mitigated risks in volatile colonial imports.^[20] English auctions echoed this Dutch model, with estate sales gaining traction by the mid-17th century for dispersing noble inventories, paintings, and books, as evidenced by notices from Samuel Pepys' era onward, which formalized conditions to attract bidders in London's coffee houses.^[21] These mechanisms underpinned precursors to the London Stock Exchange, where commodity and share auctions in venues like Jonathan's Coffee House provided price discovery for joint-stock ventures, fostering capital accumulation outside state control. In colonial contexts, auctions liquidated East India Company cargoes and privateer prizes, channeling mercantile profits back into European markets and accelerating the shift from feudal stasis to price-driven liquidity.^[22] This causal diffusion via trade routes—Dutch innovations influencing English practices—demonstrated auctions' utility in scaling exchange volumes, with Amsterdam's bourse handling VOC shares by 1611 amid surging global commodity flows.^[23]

Industrial Era and 19th-Century Expansion

In Britain, established auction houses such as Sotheby's, founded in 1744, expanded their scope during the 19th century to include fine art, jewelry, and estate sales, capitalizing on the wealth generated by industrialization and the Victorian era's enthusiasm for collecting.^[24] This period marked a shift from primarily book auctions to broader commodities, with sales reflecting the era's economic growth and the accumulation of industrial fortunes. Christie's, established in 1766, similarly thrived, hosting prominent auctions that attracted bidders from an expanding mercantile class.^[25] Across the Atlantic, the United States witnessed a surge in specialized auctions for agricultural commodities, particularly livestock and tobacco, as the young republic industrialized. Tobacco auctions emerged in Virginia around the early 1800s, driven by the need for standardized quality inspections amid growing export demands; these centralized markets enabled farmers to achieve higher, more consistent prices through competitive bidding and objective grading.^[26] By mid-century, livestock auctions supplanted earlier barter and private treaty methods, becoming the dominant sales mechanism in emerging stockyards, which facilitated efficient matching of regional suppliers with urban buyers.^[27] Advancements in transportation, including railroads operational by the 1830s and expanded steam shipping, played a causal role in scaling auction markets by drastically reducing freight costs—by 60-70% compared to wagons—and connecting distant regions, thereby enlarging bidder pools and intensifying competition over fixed-price negotiations.^[28] This infrastructure boom allowed auctions to handle larger volumes of industrial-era goods, such as bulk agricultural outputs, promoting free-market dynamics where prices dynamically reflected supply and demand rather than localized monopolies. In tobacco markets, for instance, auction warehouses in hubs like Durham, North Carolina, by the 1870s centralized trade, mitigating price discrepancies through broader participation.^[29] Overall, these developments underscored auctions' adaptability to industrial expansion, enhancing scalability by enabling rapid, transparent price discovery across expanded geographies.

20th-Century Institutionalization and Theory

In the aftermath of World War I, governments increasingly institutionalized auctions for disposing of military surplus, enabling efficient reallocation of assets from wartime to civilian production without relying on protracted administrative processes. The United States, for instance, utilized public auctions to liquidate excess war materials, a practice that gained momentum as economies shifted toward peacetime recovery and highlighted auctions' role in price discovery and resource distribution.^[30] Theoretical advancements formalized these practices in the mid-20th century. In 1961, economist William Vickrey published "Counterspeculation, Auctions, and Competitive Sealed Tenders," introducing a sealed-bid second-price auction model where the highest bidder wins but pays the second-highest bid, promoting truthful revelation of valuations and mitigating speculative behavior.^[31] Vickrey's work laid foundational insights into incentive-compatible mechanisms, earning him the Nobel Prize in Economic Sciences in 1996 for contributions to auction theory and information economics.^[32] Empirical applications underscored auctions' superiority over alternatives like lotteries or central planning. The U.S. Federal Communications Commission (FCC) launched its first spectrum auctions in July 1994 under the 1993 Omnibus Budget Reconciliation Act, replacing inefficient lotteries that often allocated frequencies to low-value users. By July 1996, these auctions had generated about $20 billion in revenue while assigning licenses to bidders demonstrating highest productive value, evidencing rapid and effective spectrum reallocation that boosted telecommunications innovation and avoided the delays and waste of prior comparative hearings or random draws.^[33]^[34] This success validated theoretical predictions of efficiency, contrasting with central planning's tendency toward misallocation by demonstrating auctions' ability to aggregate dispersed information on asset values.^[35]

Digital Revolution and Post-2000 Innovations

The advent of online auction platforms marked a pivotal shift, enabling global participation and scalability unattainable in physical settings. eBay, launched in 1995, facilitated auctions that by 2024 achieved an annual gross merchandise volume of $74.6 billion, reflecting cumulative volumes exceeding trillions since inception through expanded user bases and algorithmic bidding.^[36] This digital infrastructure reduced transaction costs by automating bid matching and verification, with quarterly GMV reaching $19.51 billion in Q2 2025, up 6% year-over-year.^[37] Amazon's early auction experiments, though discontinued by the mid-2010s, influenced subsequent dynamic pricing models that adjust in real-time based on demand and inventory, optimizing revenue in high-volume e-commerce.^[38] Blockchain technology introduced decentralized auctions post-2000, prominently via non-fungible tokens (NFTs), where sales volumes peaked at $24.9 billion in 2021 amid speculative fervor.^[39] By 2025, NFT trading persisted at elevated levels, with Q1 sales surpassing $8.2 billion, sustained through decentralized autonomous organizations (DAOs) that enable trustless, programmable bidding without intermediaries, enhancing transparency in volatile digital asset markets.^[40] These mechanisms demonstrated efficiency gains in provenance tracking and fractional ownership, though market corrections post-2021 underscored risks of overvaluation in illiquid environments. Advancements in artificial intelligence, particularly deep learning, refined auction design by 2024, with end-to-end differentiable frameworks solving multi-item optimal auctions from sampled data, outperforming traditional parametric methods in revenue maximization.^[41] Reinforcement learning models simulated bidder strategies in complex scenarios, minimizing information asymmetries.^[42] Virtual and augmented reality integrations further cut physical infrastructure costs; empirical analysis of art auctions found VR previews boosted final prices by 5.2% ($16,306 equivalent), attributing gains to immersive inspections that substitute for on-site viewings and logistics.^[43] In multi-unit auctions amid volatile conditions, 2023-2025 studies revealed prior-free bidding strategies under limited information yielded robust revenue, with maxmin preferences mitigating losses in uncertain macroeconomic settings.^[44] These innovations collectively amplified auction throughput, with AR/VR headset shipments projected to surge 41.4% in 2025 due to cost reductions and AI enhancements.^[45]

Theoretical Foundations

Core Economic Principles

Auctions function as voluntary exchange institutions where sellers offer goods or services to multiple potential buyers who compete through bids, thereby revealing underlying valuations and determining an allocative price without requiring direct seller-buyer negotiation over terms. This competitive process allocates the item to the bidder with the highest demonstrated willingness to pay, promoting efficiency by matching resources to their most valued uses based on private information held by participants.^[1] The mechanism's core advantage lies in its ability to generate prices endogenously from bidder interactions, rather than exogenously imposed figures, fostering transparency in value revelation.^[46] Central to auctions is price discovery achieved through the marginal bidder, whose bid establishes the clearing price reflective of the item's market value as signaled by competing demands. In efficient formats, such as second-price sealed-bid auctions, the winner pays the second-highest bid amount, incentivizing truthful revelation of private valuations as the dominant strategy, which decouples the transaction price from the seller's own reservation value or cost information.^[47] This independence ensures that revenue derives primarily from the distribution of bidder valuations, not seller-imposed floors beyond a minimal reserve, enabling sellers to extract surplus without needing to disclose or haggle over their private assessments.^[48] Compared to bilateral negotiations, auctions empirically mitigate holdout incentives, where a single buyer might strategically withhold agreement to extract concessions, often resulting in impasse or suboptimal terms due to asymmetric information and bargaining power imbalances. Studies of procurement contracts demonstrate that auctions yield systematically lower costs for buyers when projects involve standardized goods and verifiable performance, as competition compels bidders to internalize risks and bid aggressively, reducing the delays and premiums associated with protracted haggling.^[49] While negotiations may suit highly customized or complex scenarios requiring iterative design adjustments, auctions' structured rivalry empirically outperforms in scenarios prone to strategic delay, as multiple bidders erode any one's leverage to hold out.^[50] Auctions excel at causally aggregating dispersed, tacit knowledge across participants, where individual bidders incorporate localized information—such as unique assessments of an item's utility or future yield—into their bids, yielding a collective price signal superior to centralized estimates or pairwise deals that capture only partial data. This process mirrors broader market dynamics, wherein competitive price formation harnesses fragmented private knowledge that no planner or negotiator could fully compile, leading to more accurate resource allocation than alternatives reliant on incomplete information sharing.^[51] Empirical outcomes in diverse auction settings, from commodities to rights allocations, validate this aggregation, as bid dispersions narrow toward equilibrium prices that reflect synthesized insights rather than isolated valuations.^[48]

Game Theory and Bidder Behavior

In common-value auctions, where the item's true value is the same for all bidders but known imperfectly through private signals, game-theoretic models predict that rational bidders will shade their bids below their unconditional value estimates to avoid the winner's curse—the tendency for the highest bidder to overpay due to selection bias in winning. The Nash equilibrium in such settings requires each bidder to submit a bid equal to the expected value conditional on having the highest signal and winning, ensuring zero expected profits in symmetric equilibria while accounting for rivals' strategies. Empirical laboratory experiments confirm that inexperienced bidders often fail to fully adjust for this curse, leading to systematic overbidding, whereas experienced participants converge toward equilibrium shading.^[52]^[53] The Milgrom-Weber (1982) framework extends this analysis to environments with asymmetric information and affiliated values, where signals are positively correlated, amplifying the winner's curse but also enabling strategic inference from rivals' actions. In first-price sealed-bid formats, equilibrium bids incorporate rivals' expected signals, with bidders aggressively shading to mitigate information disadvantages; English auctions, by contrast, reveal dropping-out prices, reducing the curse through aggregated information. Field data from U.S. Outer Continental Shelf oil and gas lease auctions in the 1950s–1970s provide empirical support, showing early overbidding and negative post-auction returns for winners, which diminished as bidders learned to condition on winning probabilities and geological signal precision.^[54]^[55]^[53] Recent theoretical advancements address multi-unit common-value auctions under limited information, prevalent in volatile sectors like spectrum or commodities, where bidders demand multiple units with interdependent values. In these models, heightened volatility increases shading incentives, as imprecise signals raise the risk of correlated estimation errors across units; equilibrium strategies thus balance marginal value contributions against the amplified curse from partial awards. A 2025 study formalizes bidding under such constraints, demonstrating that limited-information equilibria yield lower revenue equivalence deviations compared to full-information benchmarks, with simulations validating robustness to ambiguity in signal distributions.^[44]^[56]

Efficiency and Revenue Equivalence

Auctions promote allocative efficiency by directing goods or rights to the bidder with the highest private valuation, thereby minimizing deadweight loss relative to non-market mechanisms like administrative allocation or fixed pricing, which often fail to reveal true demand and result in suboptimal use.^[57] In theoretical models under independent private values, ascending-bid or second-price formats ensure the item goes to the highest valuer without requiring full bid shading, contrasting with fixed-price regimes where rationing or excess supply can occur if prices deviate from equilibrium.^[58] Empirical assessments confirm this superiority; for instance, U.S. Federal Communications Commission (FCC) spectrum auctions since 1994 have achieved allocation efficiencies exceeding 90% in many cases, rapidly assigning licenses to firms investing in expanded services, unlike pre-auction European comparative hearings that delayed rollout by years and invited rent-seeking.^[59]^[57] The revenue equivalence theorem asserts that, under symmetry, independent private values, risk-neutral bidders, and affiliation assumptions, diverse auction formats—including English ascending, Dutch descending, first-price sealed-bid, and second-price sealed-bid—generate identical expected seller revenue, equivalent to the expected second-highest valuation plus any reserve price adjustment.^[60] First articulated by Vickrey in 1961 for open and sealed high-bid equivalence and generalized by Myerson (1981) and Riley and Samuelson (1981) to broader mechanisms, the theorem highlights that revenue differences arise primarily from violations of these conditions rather than format choice itself.^[61]^[58] This equivalence underscores auctions' robustness, as sellers can prioritize efficiency or simplicity without revenue trade-offs in ideal settings. Critiques positing auctions' inferiority due to strategic behaviors like the winner's curse or collusion are tempered by data showing net gains over alternatives; procurement reverse auctions, for example, have yielded 10-15% cost reductions versus fixed-price contracts in public sector pilots, as competition elicits lower bids while post-award performance remains comparable.^[62] In spectrum contexts, FCC auctions have generated over $233 billion in revenue by 2023 while fostering competition and innovation, far surpassing fixed allocation's inefficiencies, such as underused bands in pre-1994 Europe.^[57] Though real-world asymmetries can erode equivalence—evident in lower efficiencies during collusive bidding episodes—auctions consistently outperform fixed prices by dynamically matching resources to marginal uses, reducing deadweight loss through price discovery.^[59]^[63]

Auction Formats and Mechanisms

Open vs. Sealed-Bid Auctions

Open auctions, exemplified by the English format, involve publicly observable incremental bids that ascend until no higher offers are submitted, with the winner paying the final bid amount. This visibility enables bidders to gauge competitors' valuations through dropout signals, promoting convergence toward the item's true value by revealing the second-highest valuation as the effective clearing price. In private-value settings, where each bidder's valuation is independent and known only to themselves, this process theoretically equates to a second-price mechanism, encouraging bidders to remain active up to their true valuation without strategic shading. Empirical observations from laboratory experiments confirm rapid convergence, with bidders typically dropping out efficiently as prices approach their limits, often resolving within a small number of bid increments. Sealed-bid auctions, conversely, solicit simultaneous private submissions, concealing rivals' intentions until bids are revealed post-submission. First-price sealed-bid variants award the item to the highest bidder at their own bid, prompting strategic bid shading below true value to balance winning probability against overpayment risk, which can amplify the winner's curse—overestimation leading to negative utility for the victor. The Vickrey auction, a second-price sealed-bid counterpart, mitigates this by charging the second-highest bid, rendering truthful bidding a dominant strategy and thus incentive-compatible, as deviations neither increase win chances nor reduce payment when victorious. However, absent interim feedback, sealed formats preclude dynamic adjustment, heightening estimation errors compared to open revelation.^[64] Visibility profoundly influences information dynamics and strategic risks. Open formats facilitate real-time learning from observed bids, reducing uncertainty and winner's curse exposure even in near-private-value contexts with mild value correlation, while sealed bids enforce isolation, potentially deterring aggressive overbidding but inviting conservative shading that depresses prices. On collusion, open auctions' transparency risks tacit coordination via bidding restraint signals, as rivals monitor participation; empirical analyses of U.S. Forest Service timber sales indicate sealed shifts curbed perceived collusive underbidding by obscuring actions, though both formats remain vulnerable to explicit pre-auction rings. Laboratory and field studies on private-value goods, such as consumer goods procurements, reveal open formats often yielding higher seller revenues—up to 5-10% premiums in controlled settings—due to intensified competition and less aggressive shading, diverging from theoretical revenue equivalence under risk neutrality and symmetry assumptions.^[65]^[66]

Ascending, Descending, and Fixed-Price Variants

Ascending auctions, commonly termed English auctions, initiate at a low reserve price and incrementally rise through open bidding until no participant offers a higher amount, at which point the highest bidder prevails. This structure promotes sequential information disclosure, as dropping out signals upper valuation bounds to remaining bidders, causally boosting participation by enabling entrants to gauge competition intensity against their private values; under decreasing absolute risk aversion, empirical models predict and observe higher entry rates in ascending relative to non-transparent formats, fostering efficient allocation via observed demand revelation.^[63]^[67] Descending auctions, known as Dutch auctions, commence at an elevated price that methodically declines until a bidder accepts the current offer, securing the item at that level in a first-price manner. Suited to time-sensitive perishables, such as cut flowers at Aalsmeer where over 20 million transactions occur daily with sales concluding in seconds to avert wilting, this format prioritizes velocity over extended deliberation, though its opacity induces strategic delay—bidders withhold acceptance anticipating further drops—yielding empirically higher revenues than sealed first-price counterparts via phased exits at elevated thresholds, yet risking suboptimal participation absent competitive cues.^[68]^[69] Uniform-price auctions, frequently executed in descending clock variants for multi-unit sales, set a single clearing price—often the lowest accepted bid—for all winning allocations, as in treasury bill offerings where bidders submit quantity-price schedules. Japan's Ministry of Finance applied this to Japanese Government Bonds until 2007, when 30-year JGB auctions shifted to discriminatory pricing, prompting analysis of revenue impacts from uniform's encouragement of aggressive marginal bids without per-unit differentiation.^[70]^[71] Fixed-price mechanisms degenerate dynamic auctioning into a static offer, where the seller posts an invariant price for immediate purchase without bidding escalation, akin to "buy now" add-ons in hybrid platforms. This eliminates price discovery's competitive tension, curtailing participation to those valuing above the threshold but expediting transactions; theoretical robustness checks reveal inferior efficiency in non-degenerate value distributions, as it forgoes revelation incentives inherent in ascending or descending paths, trading revenue potential for certainty in low-variance contexts.^[72]

Multi-Item and Combinatorial Auctions

Multi-item auctions involve the sale of multiple distinct goods, where bidders' valuations may exhibit complementarities, meaning the value of a bundle exceeds the sum of individual item values.^[73] In unit-demand settings, bidders seek at most one item, with bundle value equaling the maximum single-item value, simplifying allocation but still requiring coordination to avoid inefficiencies.^[74] General combinatorial auctions extend this by permitting bids on arbitrary packages, enabling expression of superadditive synergies, though computational complexity in winner determination grows exponentially with items.^[75] The exposure problem arises in separate single-item auctions, where bidders aggressively bid on complements to secure bundles but risk winning subsets at prices exceeding marginal values, leading to losses or inefficiencies up to 9% in simulated multi-unit scenarios.^[76] ^[77] Combinatorial formats mitigate this via package bidding, allowing joint offers that directly capture synergies and reduce truncation risks, empirically outperforming single-item bidding in lab tests for spectrum-like goods.^[78] Iterative combinatorial auctions, developed prominently in the 2000s, use sequential rounds with dynamic price signals to elicit bids, facilitating bidder learning and convergence to efficient allocations without full valuation revelation.^[79] Formats like clock auctions update prices upward for demanded packages, enabling proxy agents to approximate optimal responses and handle information asymmetry.^[80] These were tested in FCC spectrum auctions, where package bidding in bundled licenses from the early 2000s improved allocation efficiency over sequential single-license sales, as evidenced by reduced bidder shading and higher revenues in Swiss and U.S. implementations.^[57] ^[74] By 2025, AI enhancements have advanced optimization in these mechanisms, with machine learning-powered iterative auctions like MLHCA using value and demand queries to achieve superior efficiency and faster convergence than traditional heuristics, outperforming benchmarks in simulated high-dimensional settings.^[81] Diffusion-based models further enable differentiable mechanism design for deep menus, approximating revenue-maximizing outcomes in complex combinatorial environments previously intractable.^[82] These developments leverage neural networks for bidder support and winner determination, addressing scalability limits in general valuations.^[83]

Operational Elements

Participants and Roles

In auctions, the primary participants include the seller, who consigns the item or asset for sale to maximize revenue; bidders, who compete to acquire it by submitting offers up to their private valuations; and the auctioneer, who facilitates the process as an intermediary typically compensated via commission on successful sales.^[84]^[85] The seller's incentive aligns with extracting the highest possible price, often by setting a reserve price below which the item remains unsold, while bidders aim to secure the asset at a cost below their estimated value, assuming independent private valuations and risk neutrality as foundational to auction theory.^[86] This structure promotes price discovery through competitive tension, with the auctioneer's role centered on enforcing predefined rules impartially to reveal the item's true market value without distortion.^[87] Bidders are often modeled as rational agents in economic theory, shading bids strategically to balance winning probability against overpayment risk, though behavioral deviations such as anchoring to initial prices or overbidding due to competitive arousal occur in experimental settings.^[88] Empirical field evidence from professional contexts, including repeated participation in commodity or procurement auctions, indicates that experienced bidders mitigate such biases through learning and high-stakes discipline, exhibiting near-rational behavior with reduced overbidding relative to novices—new entrants submit fewer bids and underperform initially before converging toward equilibrium strategies.^[89]^[90] The auctioneer serves as a neutral catalyst, calling bids, tracking increments, and declaring the winner to ensure transparency and adherence to format rules, with incentives tied to transaction success rather than outcome manipulation.^[91] Neutrality is critical for credible price formation, as deviations like shill bidding—where the auctioneer or affiliates artificially inflate prices—are illegal in regulated jurisdictions such as the United States under federal statutes prohibiting bid rigging, occurring infrequently due to oversight, penalties including fines up to $250,000 and imprisonment, and reputational costs in monitored environments like government or major house sales.^[92]^[93] Spectators and third parties, while not direct bidders, contribute to auction dynamics by providing observational liquidity—potentially entering as late bidders—and influencing atmosphere in live settings, where crowd presence can amplify emotional bidding intensity through social proof or perceived scarcity, though rigorous empirical quantification remains sparse and context-dependent.^[94] In physical auctions, studies of audience effects suggest heightened arousal from observers alters participant risk perception, occasionally elevating final prices by 5-10% in high-attendance events compared to subdued gatherings, underscoring the value of controlled environments for unbiased revelation.^[95]

Bidding Processes and Price Formation

In iterative bidding processes, such as those in English auctions, participants submit successive bids that must exceed the current highest offer by a predefined minimum increment, typically set by the auctioneer to manage pace and prevent nominal increases. For example, a $5 increment requires the next bid to advance the price by at least that amount from the standing bid of, say, $100 to $105 or higher. This structure contrasts with single-shot bidding in sealed formats, where each bidder submits one confidential offer without observing rivals' actions or revising based on interim feedback. Proxy bidding, common in digital platforms, automates this by allowing participants to enter a confidential maximum limit; the system then places incremental bids on their behalf up to that ceiling only as needed to counter competing offers, ensuring the winner pays the lowest amount necessary to secure the item.^[96]^[97] Price formation emerges from the aggregation of these bids toward an equilibrium where the final clearing price reflects the marginal bidder's willingness to pay. In ascending English auctions, the price trajectory ascends linearly from a starting point, with the auctioneer calling increments until dropouts leave a single active bidder, at which point the price settles at the level of the last competing bid. This dynamic reveals relative valuations through observable exits, fostering convergence as bidders adjust based on rivals' persistence. Empirical observations across auction datasets confirm that higher bidder counts correlate with reduced variance in final prices, as intensified competition compresses deviations from the item's underlying market value; for instance, analyses of procurement and resource auctions show bid spreads narrowing with participant numbers exceeding five to ten.^[98]^[99]^[100] Open visibility in iterative processes aids price discovery by disseminating bid levels in real time, enabling participants to calibrate offers against live competition and aggregate dispersed information into a unified market signal. Data from detected bidding rings and cartel investigations indicate that such transparency discourages sustained collusion, as public bid streams heighten the risk of immediate deviation detection—evidenced by lower coordination success in open-outcry formats compared to concealed submissions, where side agreements evade scrutiny more readily. In contrast, single-shot mechanisms obscure this feedback, potentially amplifying uncertainty but insulating against overt signaling attempts.^[65]^[101]

Reserve Prices, Buyouts, and Additional Features

A reserve price is the minimum amount a seller will accept for an item, below which the good remains unsold even if bids are placed. In theoretical models of optimal auction design, such as those for symmetric independent private values, the reserve price is set to maximize expected revenue by excluding bidders with valuations below a threshold where the virtual valuation equals the seller's opportunity cost, as formalized by Myerson in 1981.^[102] ^[103] Empirical analyses of English auctions, including field experiments on eBay listings, demonstrate that higher reserve prices increase revenue per sold item by filtering low bids and intensifying competition among higher-value participants, though they decrease the overall sale probability and number of bids received.^[104] ^[105] In internet advertising auctions, reserve prices have been shown to substantially elevate platform revenues by countering bidder underbidding, with effects persisting across varying bidder numbers.^[106] Public reserves in used car auctions similarly boost conditional revenues but reduce participation, highlighting a trade-off where revenue gains outweigh sales losses for high-value goods.^[107] Buyout options, exemplified by eBay's Buy-It-Now (BIN) feature introduced in 2000, permit immediate purchase at a seller-set fixed price alongside traditional bidding, often reducing auction duration by enabling quick sales to impatient or risk-averse buyers.^[108] Empirical investigations of eBay data indicate that BIN auctions yield higher revenues and efficiency compared to pure auctions without this hybrid, as they capture surplus from buyers valuing certainty over competitive outcomes.^[109] ^[110] However, buyouts can undervalue high-demand items by truncating bidding wars, leading to faster but potentially lower final prices relative to prolonged auctions, with temporary buyouts (vanishing after initial bids) mitigating some duration risks compared to permanent ones.^[111] ^[112] Additional features include sequential or cascading auctions, where multiple items are sold one after another to the same bidder pool, allowing outcomes from prior sales to inform subsequent bids and potentially smoothing price volatility across lots.^[113] In practice, this format reveals bidder valuations progressively, enhancing revenue in multi-object settings by enabling strategic adjustments without simultaneous bidding complexity.^[114] Emerging integrations, such as virtual reality (VR) for remote participation as of 2025, enable bidders to inspect items via 360-degree immersive views, reducing physical attendance needs while preserving feature authenticity through high-resolution 3D simulations.^[115] ^[116] These tools trade off traditional in-person dynamics for broader access, with empirical adoption in platforms showing improved bidder engagement without revenue dilution.^[117]

Strategic Aspects

Bidder Strategies and the Winner's Curse

In common value auctions, where the item's worth is identical to all bidders but estimated imperfectly from private signals, rational bidders employ bid shading—submitting bids below their signal-based value estimate—to counteract the winner's curse, the risk of overpayment arising from adverse selection in winning. This strategy adjusts for the conditional expectation that the highest signal overstates the true value, as lower signals from competitors imply a downward revision upon victory; failure to shade leads to negative expected profits for winners, even if ex ante bids are unbiased.^[118] Empirical models confirm that equilibrium bidding incorporates such shading, with the degree depending on signal precision and bidder count, ensuring zero expected profit in symmetric Nash equilibria.^[119] Field evidence from U.S. Outer Continental Shelf (OCS) oil and gas lease auctions in the 1970s illustrates the winner's curse's real-world impact, where winners frequently incurred losses due to overestimated reserves; petroleum engineers Capen, Clapp, and Campbell analyzed data showing post-auction returns averaging below zero for high bidders, attributing this to insufficient shading amid geological uncertainty.^[120] Subsequent econometric studies of these sealed-bid auctions validated common value assumptions, estimating that unadjusted bidding would yield systematic overbids by 20-50% of true values, though experienced firms mitigated losses through iterative learning and reduced participation in high-uncertainty tracts.^[55] Behavioral deviations appear limited in aggregate data, as drilling outcomes aligned with rational expectations models rather than persistent over-optimism, contrasting lab anomalies critiqued for lacking stakes or expertise.^[121] To further hedge against the curse, bidders in resource auctions often form consortia, pooling signals and risks to derive more accurate common value estimates and dilute individual overestimation; in OCS sales, joint bids by oil majors like Exxon and Shell correlated with higher post-win profitability, as shared seismic data enabled finer shading without full collusion.^[122] This adjustment preserves efficiency by broadening participation while curbing aggressive solo bids, though antitrust scrutiny limits scale.^[123] In multi-item combinatorial auctions, where synergies complicate valuations, recent machine learning models assist shading by querying bidder demands iteratively and optimizing bundles to approximate equilibrium bids, reducing curse exposure in exponential search spaces; a 2024 framework integrates neural networks with clock auctions to elicit truthful queries, achieving near-optimal allocation in spectrum-like settings without exhaustive enumeration.^[124] Such AI tools, tested on synthetic and historical data, enable dynamic shading adjustments to signal correlations, outperforming heuristic bidders by 10-15% in revenue equivalence benchmarks.^[125]

Auctioneer Tactics and Reserve Setting

Auctioneers, acting as agents for sellers, strategically set reserve prices to maximize expected revenue by establishing a confidential floor that screens low-valuation bidders while incentivizing competitive bidding among higher-valuation participants. In independent private value models, the optimal reserve price exceeds the seller's valuation, derived from the inverse hazard rate of the bidder value distribution, enabling surplus extraction akin to monopolistic pricing. Empirical analyses of English auctions confirm that reserves enhance revenue when calibrated appropriately, as they prevent sales below value and anchor bidder expectations upward without fully disclosing seller information.^[105]^[126] In art markets, undisclosed reserves correlate with higher realized prices for lots that sell, as evidenced by patterns where passed lots later fetch bids aligning with or exceeding initial reserves, indicating efficient thresholding rather than overpricing. Auction houses leverage their intermediary position to advise sellers on reserves based on market estimates, historical data, and current demand signals, often resulting in unsold rates of 10-30% but elevated averages for successful sales. This approach outperforms no-reserve auctions in volatile segments like fine art, where bidder heterogeneity amplifies the value of floors.^[127]^[128] Beyond reserves, auctioneers deploy pacing and descriptive tactics to sustain momentum, such as low starting bids—typically 30-50% of fair market value—to broaden participation and foster incremental escalation. Chandelier bidding, involving announced phantom bids to simulate interest, is employed sparingly to bridge gaps toward the reserve, though it remains legally contentious; in the United States, such bids are permissible below reserve but constitute fraud if used to misrepresent genuine competition above it. Recent deregulation in New York City as of 2022 has eased prior restrictions on post-reserve chandelier bids, potentially increasing their tactical use without mandatory disclosure.^[129]^[130]^[131] These seller-side mechanisms promote revenue neutrality by amplifying revealed valuations through intensified rivalry, distinct from fixed-price listings where opaque seller guesses suppress dynamic price discovery and liquidity. Unlike bidder-centric distortions, auctioneer tactics focus on participation incentives, empirically yielding superior outcomes in competitive formats over static alternatives.^[132]

Collusion Risks and Detection

Collusion in auctions typically involves bidders forming rings to suppress competition, such as by submitting complementary bids where one bidder refrains from aggressive bidding in exchange for reciprocal favors in other auctions, thereby keeping prices below competitive levels.^[133] This risk is more pronounced in sealed-bid formats, where private bid submission facilitates coordination without public observation, enabling rings to allocate wins through pre-arranged rotations or bid suppression.^[134] In contrast, empirical evidence indicates that collusion breakdowns are common in open ascending (English) auctions due to defection incentives: a colluding bidder can covertly outbid the designated "winner" to secure the item at the suppressed price, undermining the agreement and rendering sustained rings rare.^[135] Detection relies on post-auction econometric analysis of bid data for anomalies, such as identical losing bids, rotational winning patterns, or geographically clustered submissions inconsistent with independent competition.^[136] The U.S. Department of Justice (DOJ) has prosecuted numerous cases in sealed-bid procurement auctions, including a 2024 conspiracy among erosion control firms that rigged bids on over $100 million in Oklahoma highway projects through pre-arranged rotations.^[137] Similarly, in 2021, Contech Engineered Solutions pleaded guilty to bid rigging in drainage pipe contracts, paying $8.5 million in penalties after evidence revealed coordinated submissions to allocate markets.^[138] Mitigation strategies emphasize structural design to exploit cartels' internal instabilities, such as inviting a larger number of potential bidders, which heightens coordination costs and free-rider incentives, making collusion less feasible as the participant pool expands beyond a manageable size.^[136] By 2025, blockchain implementations have emerged to enhance transparency in digital auctions, using immutable ledgers and cryptographic verification to enable real-time auditing of bids, thereby deterring collusion through verifiable non-repudiation and reduced opportunities for covert side-agreements.^[139]

Applications Across Contexts

Government and Spectrum Auctions

Government spectrum auctions represent a shift from administrative allocations, which historically resulted in inefficient use and forgone revenue, to market-based mechanisms that assign licenses to highest-value users while generating substantial fiscal returns. Prior to auctions, agencies like the U.S. Federal Communications Commission (FCC) relied on comparative hearings or lotteries, often leading to spectrum underutilization and zero direct revenue, as licenses were awarded without competitive pricing.^[140] The introduction of auctions via the U.S. Omnibus Budget Reconciliation Act of 1993 enabled the FCC to conduct its first spectrum auction in July 1994 for narrowband personal communications services (PCS), raising $616 million initially, with subsequent auctions from 1994 to 1996 generating approximately $20 billion overall.^[141] These early sales demonstrated auctions' ability to reveal true market values, allocate spectrum to firms poised for rapid deployment, and fund public treasuries, contrasting sharply with pre-auction practices that sacrificed billions in potential revenue.^[35] European 3G spectrum auctions in 2000 further evidenced this superiority, yielding nearly €110 billion across member states for 3G bands, with standout results including €50.8 billion in Germany and £22.5 billion in the United Kingdom.^[142]^[143] These auctions outperformed administrative "beauty contests" used previously, which favored incumbents and stifled competition, by promoting broader market entry and spurring investments in mobile infrastructure that accelerated technological adoption.^[35] Empirical analyses confirm auctions' edge in efficiency, as they minimize rent-seeking in allocation processes and ensure spectrum reaches users with the highest willingness to pay, fostering innovation booms in telecommunications post-auction.^[140] For instance, U.K. spectrum auctions following 1980s telecom privatization of British Telecom enhanced competitive dynamics, causally contributing to expanded network coverage and service innovation by incentivizing operators to deploy advanced technologies.^[144] In government procurement, reverse auctions—where suppliers bid downward to win contracts—have similarly proven effective for cost containment. The U.S. Department of Defense (DoD) has implemented reverse auctions for low-value items, achieving measurable savings through heightened competition; broader federal use, including DoD, yielded up to $100 million in savings in 2016 alone via iterative bidding that drove prices below initial quotes.^[145]^[146] Studies estimate DoD could realize annual savings nearing $6.1 billion by scaling reverse auctions, as they counteract supplier pricing power and align procurement with market efficiencies absent in traditional negotiations.^[147] Overall, these mechanisms underscore auctions' role in public resource allocation by prioritizing empirical value revelation over subjective administrative judgments, yielding both fiscal and operational gains.^[35]

Commodity, Real Estate, and Art Markets

Auctions in commodity markets, such as those for livestock, wool, and fish, enable rapid price discovery by aggregating buyer and seller information in real time, contributing to market stability.^[148] For instance, physical auctions at venues like Tsukiji fish market or cattle sales yards determine spot prices based on immediate supply and demand signals, while futures contracts on the Chicago Mercantile Exchange (CME) extend this process, providing deep liquidity and transparent pricing across global participants.^[149] This mechanism reduces information asymmetries and stabilizes prices by reflecting empirical factors like weather impacts on harvests or herd health, with CME's commodity products facilitating hedging against volatility.^[148] In real estate, auctions are prominently used for foreclosures and tax lien sales, offering efficiencies in liquidity provision during distressed conditions. Empirical observations indicate that auctioned properties typically close in under 30 days, contrasting with traditional listings that can linger for months or years due to protracted negotiations.^[150] This speed accelerates capital turnover and resolves ownership uncertainties faster, as evidenced in markets like delinquent property tax auctions where competitive bidding uncovers buyer valuations without extended marketing periods.^[151] While prices may vary with demand strength, auctions enhance overall market fluidity by matching assets to highest-value users promptly.^[152] Art auctions at houses like Sotheby's and Christie's demonstrate sector-specific efficiencies through high-volume transactions that signal valuations and provide liquidity for illiquid assets. In 2023, Sotheby's achieved $3.8 billion in sales, followed by Christie's at $3.5 billion, with top lots including works by Picasso and Klimt fetching tens of millions, contributing to a combined top-10 painting total of $675.4 million.^[153]^[154] These sales reveal empirical willingness-to-pay, informed by provenance and condition, fostering efficient price formation despite art's subjective elements; experienced auctioneers' pre-sale estimates further refine information quality, aiding buyer decisions.^[155] High bids often serve as wealth signaling, yet the competitive format ensures allocations to those deriving highest utility, enhancing market depth over private dealings.^[156]

Online Platforms and E-Commerce

Online auction platforms have dramatically expanded the scalability of auctions by digitizing bidding processes, allowing participants from diverse geographic locations to engage without physical presence requirements. Platforms like eBay, which pioneered consumer-to-consumer and business-to-consumer auctions, facilitate global access through user-friendly interfaces and automated systems, reducing entry barriers such as travel costs and time constraints. In 2024, eBay reported a gross merchandise volume (GMV) of $75 billion across its auctions and fixed-price listings, with auctions comprising a significant portion that underscores the format's role in enabling millions of daily transactions worldwide.^[157]^[158] This volume reflects how online mechanisms lower search and participation costs, empirically demonstrated to increase bidder involvement compared to traditional auctions, as lower informational frictions allow more casual participants to join without specialized knowledge or proximity to sale venues.^[159]^[160] Proxy bidding algorithms, a core feature on platforms like eBay, automate incremental bids on behalf of users up to their predefined maximum, minimizing emotional overbidding while maintaining competitive dynamics. This system contrasts with manual bidding by shielding participants from real-time pressure, yet it has spurred the development of sniping software—tools that submit bids in the auction's final seconds to exploit proxy limitations and potentially secure wins at lower prices. Empirical analyses of eBay data indicate that sniping occurs in up to 10-20% of auctions and can reduce final prices by avoiding early bid escalation, though it may deter some participants wary of technological disadvantages; overall, such tools enhance efficiency for informed users but highlight persistent strategic adaptations in digital environments.^[161]^[162] The global online auction market, valued at approximately $5.25 billion in 2023, is projected to reach $11.3 billion by 2032, driven by these algorithmic efficiencies that democratize access for small sellers and buyers in emerging markets.^[163] The COVID-19 pandemic from 2020 onward accelerated the adoption of hybrid live-streamed auctions, blending real-time video with remote bidding to replicate in-person excitement while sustaining physical elements for high-value sales. Auction houses like Christie's reported a digital audience of 3.3 million engaging with livestreams in 2021, a trend that persisted into 2025 with integrated platforms allowing synchronized global participation and reducing geographic barriers further.^[164] This shift has been empirically linked to broader market liquidity, as remote bidding volumes surged without corresponding drops in average sale prices, enabling sustained scalability post-pandemic. Emerging virtual reality (VR) integrations, tested in select 2024-2025 pilots by platforms and houses, allow immersive virtual inspections of items, further lowering evaluation costs and boosting participation among tech-savvy demographics, though adoption remains limited to niche applications as of 2025.^[165]

Emerging Technological Integrations

Blockchain technology has facilitated decentralized auctions through non-fungible tokens (NFTs), enabling direct peer-to-peer transfers of digital assets without traditional intermediaries, thereby reducing associated rents and verification costs. The NFT market experienced a boom in 2021, with sales volumes peaking amid high-profile art auctions, but by 2025, it has matured toward practical utilities like real-world asset tokenization and cross-chain standards, with the global market valued at approximately $34.1 billion and projected to reach $61.01 billion by year-end at an 18.5% CAGR from 2020.^[40]^[166] This integration enhances trust via immutable ledgers, as seen in platforms like OpenSea, which handled millions of visits monthly in 2025 while supporting auction formats for unique digital items.^[167] Advances in deep learning have enabled data-driven auction design, approximating optimal mechanisms from sampled bidder data rather than analytical solutions alone. A 2024 Journal of the ACM paper introduced differentiable economics frameworks using neural networks to solve multi-item optimal auction problems end-to-end, achieving strategy-proof outcomes that outperform prior heuristics in complex settings.^[41] Building on this, a 2025 ACM study on robust data-driven auction design employs deep learning to derive revenue-maximizing rules resilient to distributional shifts, demonstrating empirical improvements in simulated environments with heterogeneous bidder valuations.^[168] These methods leverage sample-based optimization, allowing auctioneers to tailor formats dynamically based on historical bidding data, though they require validation against real-world incentive constraints. Virtual and augmented reality (VR/AR) technologies have introduced immersive remote bidding for unique assets like art and real estate, expanding participation while empirically boosting efficiency. In online house auctions, VR integration increased final sale prices by 5.2%—equivalent to about $16,306 USD—by enhancing bidder immersion and reducing information asymmetries through virtual walkthroughs.^[43] AR overlays enable real-time asset inspection via mobile devices, cutting travel costs for international bidders, as adopted by major auction houses for hybrid events since the early 2020s; studies indicate this lowers logistical expenses by up to 30% in remote scenarios without compromising perceived value.^[169]^[170] Such tools verify efficiency gains by correlating higher engagement metrics with faster price discovery in dispersed markets.

Economic Impacts and Significance

Resource Allocation Efficiency

Auctions facilitate efficient resource allocation by directing goods to bidders with the highest private valuations, thereby minimizing deadweight loss associated with suboptimal uses. In theoretical models with independent private values, formats such as the Vickrey auction ensure incentive-compatible bidding that reveals true valuations, leading to allocations that maximize total surplus without requiring a central authority to possess complete information on individual preferences.^[63] Empirical analyses across procurement, treasury, and other settings confirm low efficiency losses, with competition driving outcomes close to full surplus extraction; for instance, studies of procurement auctions report deadweight losses below levels implied by entry costs alone, as additional bidders enhance allocative precision.^[63]^[171] Compared to administrative allocations or lotteries, auctions yield Pareto improvements by avoiding random assignments or bureaucratic judgments that ignore dispersed bidder knowledge. Administrative methods, such as pre-1994 FCC comparative hearings for spectrum licenses, prolonged allocation processes—often spanning years—while failing to aggregate private information on optimal uses, resulting in persistent mismatches until costly resales or reauctions occurred. Lotteries, used for early cellular licenses, exacerbated inefficiencies, requiring up to a decade for market-driven reallocation due to high transaction frictions. In contrast, auction mechanisms enable bidders to express package preferences, forming efficient aggregations with minimal post-auction trading, as evidenced by uniform pricing across similar licenses (differences under 1% in early FCC broadband auctions) and high initial assignment stability.^[33] This informational aggregation mirrors broader market processes, where bidding incorporates fragmented private data—such as local demand forecasts or technological synergies—beyond any planner's grasp, directing resources to highest-value applications without centralized computation. In FCC spectrum auctions, this has manifested in tangible outcomes: exclusive licenses post-1994 spurred investments yielding U.S. leadership in 4G coverage, with reduced interference enabling reliable nationwide service expansion that pre-auction rigidities hindered. Offshore oil lease auctions similarly demonstrate Pareto dominance over non-market alternatives, allocating tracts to firms best positioned for extraction while preserving surplus for non-winners through competitive pricing.^[172]^[173] Empirical work on diverse goods, including timber and electricity, reinforces that such mechanisms sustain near-efficient equilibria even under strategic behavior, with deadweight losses curtailed by revealed bid patterns.^[63]

Revenue Generation and Market Liquidity

Auctions serve as a critical mechanism for governments to generate substantial fiscal revenues, particularly through the allocation of spectrum licenses and privatization of public assets. Globally, spectrum auctions have raised over $100 billion in proceeds since the 1990s, enabling efficient assignment of radio frequencies while funding public budgets. In the United States, the Federal Communications Commission has collected more than $155 billion from wireless spectrum auctions over the past decade, with additional billions from ongoing sales supporting deficit reduction and infrastructure investments. Similarly, cumulative proceeds from global privatization programs, frequently executed via competitive auctions, surpassed $1 trillion by the early 2000s, demonstrating auctions' capacity to unlock value from state-owned enterprises and natural resources.^[174]^[175]^[176] U.S. Treasury auctions exemplify revenue generation on a massive scale, with 2023 issuances of marketable securities—encompassing bills, notes, bonds, and inflation-protected securities—totaling trillions in gross proceeds to finance federal borrowing needs and rollover maturing debt. These uniform-price and competitive bidding formats ensure broad participation from investors, minimizing borrowing costs while providing predictable liquidity to the debt market; for context, analogous 2024 auctions issued approximately $28.5 trillion across 440 events. Such mechanisms not only bolster government fiscal flexibility but also stabilize public finance amid varying economic conditions.^[177]^[178] In private markets, auctions enhance liquidity by facilitating rapid asset disposition in distress scenarios, such as corporate bankruptcies or forced sales, where bilateral negotiations often prolong stagnation and erode value. By drawing diverse bidders and enforcing transparent pricing, auctions accelerate turnover, preempting further depreciation and injecting capital into recovering sectors—as observed in the 2023 rebound, where auction-driven sales in illiquid assets supported broader market stabilization. Empirical analyses of over-the-counter markets underscore this, showing auction formats maintain fluidity even under stress for assets with varying credit quality, outperforming opaque negotiations in transaction velocity.^[179] Real estate markets illustrate auctions' liquidity advantages, with studies revealing that auction sales yield swift price discovery and reduced momentum effects compared to negotiations, enabling higher transaction volumes and market fluidity. For instance, auctioned properties exhibit predictive pricing with minimal serial correlation, contrasting negotiated deals' prolonged adjustments, which can hinder overall turnover; this dynamic has proven vital in high-velocity segments like foreclosures, where auctions expedite conversions to productive use. Such evidence counters views undervaluing auctions, highlighting their role in sustaining economic circulation over protracted private dealings.^[180]^[181]

Empirical Evidence of Market Benefits

Empirical analyses of procurement auctions reveal consistent cost reductions relative to negotiated alternatives. A study of enterprise-wide procurement auctions reported an average 9.6% decrease in costs over three years, equating to $17.91 million in annual savings adjusted to 2003 dollars, attributed to intensified competition among bidders.^[182] Similarly, reviews of online reverse auctions highlight procurement prices frequently lower than those from bilateral negotiations, with savings driven by real-time bidding dynamics that pressure suppliers to reveal efficiencies.^[100] These findings hold across datasets where bidder numbers exceed thresholds for effective rivalry, countering claims of inherent inefficiency in standardized goods markets.^[49] Auction formats also demonstrate revenue advantages over fixed-price or sequential bargaining mechanisms in empirical settings. Discriminatory multi-unit auctions, for example, outperform uniform-price variants by generating 0.01% to 1.5% higher revenues in treasury bill sales, as bidders shade less aggressively under quantity-discounted pricing.^[183] Field data from diverse auctions confirm revenue equivalence holds approximately under independent private values, but strategic designs—such as those informed by Wilson and Milgrom's models—yield superior outcomes by mitigating winner's curse and encouraging entry, with realized revenues aligning closely to theoretical benchmarks in high-stakes environments.^[184]^[63] Participation in auctions empirically supports net gains for voluntary agents, as bidders enter only when anticipated surplus exceeds costs, fostering trade without coerced exploitation. Datasets from procurement and treasury auctions show positive net welfare for entrants, with efficiency losses minimal (under 5% deviation from first-best) when designs neutralize common informational asymmetries, as per post-Nobel validations of neutral auction architectures.^[185] Post-auction analyses indicate sustained supplier innovation, with cost curves shifting downward due to competitive spillovers, rather than entrenching biases toward incumbents.^[63] These patterns affirm auctions' role in realizing mutual gains, distinct from zero-sum negotiations prone to holdout frictions.^[186]

Controversies and Criticisms

Fraud, Manipulation, and Shill Bidding

Shill bidding occurs when sellers or their agents place fictitious bids to artificially inflate the perceived value of an item, driving up the final price paid by legitimate bidders.^[93] Empirical analyses of eBay auctions, including those for vehicles, estimate shill activity in a minority of listings, with detection rates aided by machine learning algorithms that analyze bidding patterns such as rapid escalations from new accounts or bids just above competitors.^[187] Platform-enforced policies, including account suspensions, limit its prevalence, as evidenced by studies showing shill bids contributing to only modest price inflation in affected auctions, often under 10% above fair market value.^[188] Bid rigging, a form of collusion where competitors agree to suppress bids or allocate contracts, undermines auction competitiveness and has been targeted by U.S. Department of Justice antitrust enforcement. In the construction sector during the 2010s, prosecutions included cases against ready-mix concrete firms for fixing prices and rigging bids, resulting in multimillion-dollar fines and prison terms averaging 25 months by fiscal year 2012.^[189] Similar actions addressed real estate foreclosure auctions, with over 36 individuals charged by 2013 for schemes inflating default property prices through coordinated non-competitive bidding.^[190] These prosecutions demonstrate regulatory deterrence, as escalating penalties and leniency programs for cooperators have disrupted cartels, though empirical evidence indicates persistent challenges in sealed-bid formats where transparency is limited.^[191] Open auction formats inherently expose manipulation through public bid histories, enabling bidder scrutiny and self-correction via reputation mechanisms. Platforms like eBay correlate higher seller ratings with reduced fraud disputes, as buyers avoid low-reputation accounts exhibiting irregular bidding, thereby incentivizing honest behavior without formal intervention.^[192] Emerging blockchain implementations further mitigate risks by providing immutable, decentralized ledgers of bids, preventing retroactive alterations and enabling smart contracts that impose dynamic penalties for detected shill patterns, as proposed in frameworks tested post-2020.^[193] While not eliminating all malpractices, these combined deterrents—transparency, reputation, and technology—empirically curb widespread fraud, with DOJ data showing sustained enforcement efficacy in reducing convicted collusions over time.^[194]

Debates on Fairness and Inequality

Auctions are often critiqued for favoring wealthier participants, as bidding capacity correlates with financial resources, potentially reinforcing economic disparities in outcomes for high-value items like art or real estate. However, auction theory posits that standard formats, such as English or Vickrey auctions, ensure procedural fairness through anonymous, nondiscriminatory rules that allocate goods to the highest valuer, independent of bidder identity, thereby revealing objective market values rather than arbitrary preferences.^[195] This merit-based approach counters claims of inherent bias by prioritizing demonstrated willingness to pay, which proxies for perceived utility, over egalitarian redistribution.^[196] Empirical analyses of auction markets, including procurement and commodity sales, emphasize efficiency in resource allocation over evidence of inequality amplification, with studies showing that auction designs promote competitive neutrality without systematically widening wealth gaps beyond pre-existing distributions.^[63] For instance, experimental data indicate that market auctions enhance perceived fairness as a procedure, even when outcomes vary by bidder strength, as participants view competition itself as equitable compared to non-market alternatives like negotiation.^[197] Critics' focus on "rich win" dynamics overlooks that fixed-price sales or inheritance similarly concentrate assets among the affluent without competitive revelation of value, rendering auctions comparatively neutral.^[196] Data from diverse auction contexts reveal no causal link to rising inequality; instead, broader participation in online formats has democratized access for non-elite bidders, diluting concentration in segments like collectibles and enabling value discovery across income levels.^[198] While art auctions exhibit ownership skewed toward high-net-worth individuals—reflecting item rarity and global bidder pools— this pattern persists across sales methods and does not empirically stem from auction mechanics alone, but from asset illiquidity and valuation heterogeneity. Academic sources, often institutionally inclined toward equity critiques, provide limited quantitative support for systemic unfairness claims, prioritizing efficiency metrics in empirical work.^[63]

Critiques of Government Interventions

Government-imposed reserve prices in auctions, intended to ensure minimum revenues or protect sellers, often reduce allocative efficiency by deterring bidder participation and preventing assets from reaching their highest-valued users. Empirical studies of procurement and resource auctions demonstrate that high reserve prices correlate with fewer bidders and lower overall efficiency, as they exclude marginal participants who might otherwise compete effectively.^[199] In contexts like online and timber auctions, reserves set too aggressively lead to suboptimal outcomes, with evidence showing diminished revenues and trade realization when bidder entry is stifled.^[63]^[200] Pre-1990s administrative allocations of radio spectrum exemplified the inefficiencies of non-market government interventions, where licenses were assigned via lotteries, beauty contests, or first-come-first-served methods, resulting in underutilization and failure to reveal true economic values. These approaches wasted spectrum resources by prioritizing political or arbitrary criteria over competitive pricing, contrasting sharply with post-1994 FCC auctions that enhanced efficiency through market mechanisms.^[35]^[201] Auctions mitigated these distortions by eliciting bidders' valuations directly, generating superior resource allocation without extensive regulatory overlays.^[202] Political favoritism in government procurement auctions further distorts outcomes, as discretion in tender processes enables cronyism, inflating costs and favoring connected firms over efficient ones. Studies of asymmetric procurement reveal that favoritism toward incumbents or allies leads to higher procurement prices and reduced competition, with empirical evidence from reforms showing bunching of bids around thresholds indicative of manipulated discretion.^[203]^[204] In emerging economies, such interventions correlate with lower firm productivity growth, as politically favored contracts misallocate resources away from merit-based allocation.^[205]^[206] Mechanisms like Vickrey auctions, requiring minimal intervention beyond truthful bidding rules, have demonstrated success in procurement by incentivizing accurate valuations without reserves or favoritism, though their rarity stems from implementation challenges rather than inherent flaws.^[207] Recent analyses of ecosystem service auctions, including those for conservation payments, indicate that excessive regulation—such as complex eligibility criteria—hampers participation and cost-effectiveness, with studies up to 2025 underscoring that streamlined formats yield better empirical results than heavily administered alternatives.^[208]^[209]

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Feb 11, 2025 · Unlike the Civil War, there wasn't much military surplus after WWI due to the United States' comparatively limited, short-term involvement in ...
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[PDF] Counterspeculation, Auctions, and Competitive Sealed Tenders
Author(s): William Vickrey. Source: The Journal of Finance , Mar., 1961, Vol. 16, No. 1 (Mar., 1961), pp. 8-37. Published by: Wiley for the American Finance ...
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[PDF] William Vickrey: A Pioneer in the Economics of Incentives
He showed that a new auction design first proposed in that paper-a sealed tender in which the highest bidder receives the item but pays a price equal to the ...
[33]
[PDF] The Efficiency of the FCC Spectrum Auctions - Peter Cramton
From July 1994 to July 1996, the Federal Communications Commission (FCC) conducted nine spectrum auctions, raising about $20 billion for the U.S. Treasury.
[34]
[PDF] FCC Spectrum Auctions
• Since auctions began in 1994. • 1,503 bidders won 22,347 licenses in 42 auctions. • 1,173 (79%) bidders were small, very small or entrepreneur businesses ...
[35]
[PDF] Spectrum Allocation Methods: Studying Allocation through Auctions
Other methods like lottery systems and first-come-first- serve also have their limitations of being low on efficient allocation and less profitable for the ...
[36]
eBay Revenue and Usage Statistics (2025) - Business of Apps
eBay had $74.6 billion gross merchandise volume in 2024, a 1.9% increase on the previous year. eBay gross merchandise volume 2007 to 2024 ($bn). Year, Gross ...
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eBay Gross Merchandise Volume (GMV) 2018-2025
Last reported quarter 2025 Q2 it was $19.51 billion, up by 6% year-over-year from $18.42 billion. From $73.21 billion in 2023 it increased by 2% to $74.67 ...
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The Amazon Effect: Dynamic Pricing Done Right - Pragmatic Institute
Amazon created a pricing strategy designed to excel in the rapidly-changing online retail market before other companies thought to do so.
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49 NFT Statistics 2025 – Worldwide Data & Market Forecast
May 23, 2025 · In 2021, About 28.6 Million Wallets Traded NFTs. NFT sales volumes totaled roughly $24.9 billion in 2021; as per the source, this was a ...Nft Statistics In-Depth · The Largest Nft Marketplace... · 17.) The Nft Art Segment...Missing: peak | Show results with:peak<|separator|>
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NFT Market Growth Statistics 2025: Key Figures, Marketplaces, and ...
Rating 4.4 (726) Jul 12, 2025 · Market valuation projected at $34.1 billion in 2025 (CAGR 18.5% since 2020). Q1 2025 sales exceeded $8.2 billion. Over 85 million NFTs minted ...
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Optimal Auctions through Deep Learning: Advances in Differentiable ...
Feb 11, 2024 · In this work, we provide the first, general-purpose, end-to-end approach for solving the multi-item optimal auction design problem. We use multi ...
[42]
The Use of Artificial Intelligence for Auction Design - Khezr
Jul 31, 2025 · This paper investigates the use of artificial intelligence—specifically, model-free reinforcement learning—as a method to simulate bidding ...
[43]
Virtual Reality, Real Profits: How VR Reshapes Price, Bidding ...
Jun 5, 2025 · Estimation results show that VR could improve the final auction price by 5.2% (or $16,306 USD equivalent). This positive effect is partially ...Missing: integrations physical
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Bidding in multi-unit auctions under limited information - ScienceDirect
Multi-unit auctions frequently take place in environments with limited information, such as in new markets and under volatile macroeconomic conditions.
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VR and AR headsets demand set to surge on AI, lower costs, IDC says
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Price Discovery Explained: Process, Factors, and Comparison with ...
Price discovery happens when buyers and sellers come together to agree on an asset price. It happens by considering factors like supply and demand, risk, ...What Is Price Discovery? · How Price Discovery... · The Intricacies of the Price...
[47]
First and Second Price Auctions: The Economics
In first price auctions, the bid is the price paid. In second price auctions, the price is one cent higher than the second highest bid. Second price auctions ...
[48]
The Prize in Economic Sciences 2020 - Popular science background
The outcome of an auction (or procurement) depends on three factors. The first is the auction's rules, or format. Are the bids open or closed? How many times ...
[49]
[PDF] Auctions Versus Negotiations in Procurement: An Empirical Analysis
While these are both interesting theoretical papers, we focus on distinct trade-offs between auctions and negotiations that lend themselves to empirical ...Missing: bilateral holdout
[50]
[PDF] Auctions Versus Negotiations in Procurement: An Empirical Analysis
Indeed, the construction management literature sug- gests that there is a strong correlation between the use of cost-plus contracts and the use of negotiations ...Missing: bilateral holdout
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"The Use of Knowledge in Society" - Econlib
Feb 5, 2018 · Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the ...
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[PDF] Common Value Auctions and the Winner's Curse - Upjohn Research
Note that the overbidding associated with the winner's curse is not simply a matter of miscalibrated bidders, it is associated with funda- mental breakdowns of ...
[53]
[PDF] Common Value Auctions and the Winner's Curse
Governments routinely use auctions to purchase goods and services, to sell government assets, and to fund the national debt.
[54]
A Theory of Auctions and Competitive Bidding - jstor
For example, in the first-price auction a bidder whose information is also available to some other bidder must have zero expected profits at equilibrium ( ...
[55]
[PDF] The Case of Federal Offshore Oil and Gas Lease Auctions Ken ...
This evidence supports the claim that oil and gas leases are common value assets and the prediction that the winner's curse can prevent rings from forming in ...
[56]
Bidding in multi-unit auctions under limited information - IDEAS/RePEc
Multi-unit auctions frequently take place in environments with limited information, such as in new markets and under volatile macroeconomic conditions.
[57]
[PDF] Spectrum Auctions - Peter Cramton
Much of the research on spectrum auction design has focused on the Personal Communication Services (PCS) auctions in the US.<|separator|>
[58]
[PDF] Auction Theory - Stanford University
Second, bidder i's value is independent of bidder j's information – so bidder j's information is private in the sense that it doesn't affect anyone else's ...
[59]
Measuring the Efficiency of an FCC Spectrum Auction
We propose a method to structurally estimate the deterministic compo- nent of bidder valuations in FCC spectrum auctions, and apply it to the.
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Revenue equivalence - Department of Mathematics
The version of the Revenue Equivalence Theorem that we present in this lesson was first proved by Vickrey in 1961. This result was generalized 20 years later by ...Missing: origin | Show results with:origin
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[PDF] Revenue Equivalence Theorem - Felix Munoz-Garcia
Vickrey (1961) and Myerson (1981) were about to prove what is now known as the revenue equivalence theorem, stating that under certain, general conditions, all ...Missing: origin | Show results with:origin
[62]
Auctions Versus Fixed Prices: Lessons from a Procurement Pilot - NIH
Fixed pricing eliminates the competitive setting, which means that the price is often set too high to ensure the availability of services.Missing: reduce deadweight loss savings
[63]
[PDF] Empirical Perspectives on Auctions - Becker Friedman Institute
Procurement auctions also bring up important issues at the interface of auctions and economics of contracts. Many projects are led by a general contractor ...
[64]
[PDF] The Lovely but Lonely Vickrey Auction - Paul Milgrom
For a single item, the mechanism is often referred to as the second-price sealed-bid auction, or simply the Vickrey auction. Bidders simultaneously submit ...
[65]
[PDF] Comparing Open and Sealed Bid Auctions: Theory and Evidence ...
Existing examples suggest that with a fixed set of heterogeneous bidders, revenue is often (but not always) higher with sealed bidding. Endogenous entry ...
[66]
[PDF] The Revenue Ranking of Open versus Sealed Auctions
We discuss the basic structure of the bidding game, the differences in equilibrium bidding in the open and sealed bid formats in pri- vate, common, and ...
[67]
[PDF] Ascending Auctions - Peter Cramton
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[68]
Dutch and first-price sealed-bid auctions - Cornell Mathematics
In a Dutch auction, the auctioneer decreases prices from a high price until one bidder accepts. It ends when one bidder accepts the price.
[69]
Robust bidding and revenue in descending price auctions
Dutch auctions generate more revenue than first-price auctions because the gradual information transmission leads bidders to exit earlier at higher prices.<|separator|>
[70]
[PDF] Discriminatory versus uniform auctions: Evidence from JGB market
In 2007, the Japanese government changed the format of auctions for 30-year Japanese government bonds (JGB) from uniform to discriminatory.
[71]
[PDF] Discriminatory Versus Uniform Auctions : Evidence From JGB Market
In a discriminatory auction, winners pay their bid prices. In a uniform auction, all winners pay the same price (the lowest winning price).
[72]
[PDF] Robust Analysis of Auction Equilibria - arXiv
Oct 5, 2023 · efficiency on any fixed, degenerate value distribution will also tightly characterize its worst-case competitive efficiency over all ...
[73]
[PDF] Combinatorial Auctions - Peter Cramton
... general area of research is mathematical programming. Her current research focuses on computer-based algorithms and combinatorial auctions. Amir Ronen is ...
[74]
[PDF] Combinatorial Auctions - Brown CS
Apr 1, 2020 · In March 2000, Switzerland auctioned off licenses for three blocks of spectrum sequentially, again using Vickrey auctions. The first two.
[75]
Combinatorial auction design - PNAS
Combinatorial auctions allow for more expressive bidding in which participants can submit package bids with logical constraints that limit allowable ...
[76]
Exposure problem in multi-unit auctions - ScienceDirect.com
Either Bidder 3 wins only one site at a price above 155 or both sites for more than 310. This is called the exposure problem (e.g., Milgrom, 2004; Meng and ...
[77]
[PDF] A Study of the Exposure Problem in Multi-Unit Auctions - CORE
Multi-unit auctions are sometimes plagued by the so-called exposure problem. In this paper, we analyze a simple game called the 'chopstick auction' in which ...
[78]
[PDF] Auctions with Package Bidding: An Experimental Study
If package bidding is not allowed, then the exposure problem can lead to ineffi ciencies. Thus, the hypothesis about exposure problems: Hypothesis 2. When ...
[79]
[PDF] Iterative Combinatorial Auctions - Harvard DASH
1 Introduction. Combinatorial auctions allow bidders to express complex valuations on bundles of items, and have been proposed in settings as diverse as the ...
[80]
A modular framework for iterative combinatorial auctions
We describe a modular elicitation framework for iterative combinatorial auctions. The framework includes proxy agents, each of which can adopt an ...
[81]
[PDF] One ML-Powered Combinatorial Auction to Rule Them All - arXiv
Feb 1, 2025 · MLHCA is a new ML-powered auction that uses both value and demand queries, achieving high efficiency and convergence speed, and outperforming ...Missing: enhancements | Show results with:enhancements
[82]
\name: Deep Menus for Combinatorial Auctions by Diffusion-Based ...
Feb 21, 2025 · Differentiable economics—the use of deep learning for auction design—has driven progress in the automated design of multi-item auctions with ...
[83]
One ML-Powered Combinatorial Auction to Rule Them All - ICML 2025
This paper advances the field of iterative combinatorial auctions (ICAs) by introducing MLHCA, a novel machine learning-powered auction mechanism that achieves ...Missing: enhancements | Show results with:enhancements
[84]
[PDF] Auctions and Bidding: A Primer - Paul Milgrom
Positive correlation has been especially promi- nent in models of auctions for oil and gas drilling rights, where the rights being acquired are, to a first ...
[85]
Auction Theory - an overview | ScienceDirect Topics
In auctions, an auctioneer is a person who wishes to allocate an item for sale to a buyer from a group of bidders. There are four main types of auctions [37]: ( ...<|separator|>
[86]
[PDF] Auction theory - Duke People
An auction is a market mechanism in which a price for an item is determined from bids submitted by competing buyers. As an alternative to posted prices, ...
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The economics of auctions - Vanguard Property Auctions
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Behavioral Biases in Auctions: An Experimental Study
Apr 10, 2010 · This paper investigates implications of some of the well-known behavioral biases of bidders' behavior in different types of auctions.
[89]
[PDF] Empirical Essays on bidders behavior in AUCTIONS - JScholarship
Preliminary reduced-form evidence suggests the presence of bidder learning: firms new to the market are less active (submit fewer bids) than their competitors, ...
[90]
[PDF] Bidding behavior in housing auctions
Dec 31, 2022 · Using data on more than one million bids from almost 200,000 housing transactions, we examine behavioral patterns uncovered in bidding logs.<|separator|>
[91]
[PDF] Bid Takers or Market Makers? The Effect of Auctioneers on Auction ...
The auction company and its auctioneers make it clear that the primary role of the auctioneer in this context is to maximize the probability of each car selling ...
[92]
An analysis of bid rigging by a corrupt auctioneer - ScienceDirect.com
In many auctions, the auctioneer is an agent of the seller. This invites corruption. We analyze a model in which the auctioneer orchestrates bid rigging by ...
[93]
[PDF] 191 Online Auction Fraud: An Empirical Analysis of Shill-bidding ...
Thus, a seller that uses shill bidding, if caught, may be liable for damages, including prosecution due to breach of contract and misrepresentation of the value ...
[94]
Surprise Spending: Why You Behave Differently at an Auction
Jun 16, 2024 · Auction behavior is impacted by emotion, persuasion, weather, and the perception of quality, not just price. Also, the bidder's preferences and ...
[95]
Audience effects: what can they tell us about social neuroscience ...
Oct 13, 2016 · An audience effect is a change in behavior when someone believes they are being observed, requiring awareness of the other's watching.
[96]
Proxy Bid Auction: What Is It? - AuctionMethod
Jun 11, 2025 · A proxy bid auction allows bidders to enter the highest price they're willing to pay for an item (called a maximum bid) and then lets the auction platform ...
[97]
Understand: Auction Bidding Styles - RallyUp Support
Proxy Bidding Auctions make the bidding process easier and ... Example: If a current bid is $15 and the bid increment is $5, the proxy will only bid $20.
[98]
Handbook - Auctions - English Auction - EconPort
The English auction is also known as an open-outcry ascending-price auction. In the English auction, the price is successively raised until only one bidder ...
[99]
Learn About English Auction Bidding Strategies
The bids start at a low price and ascend up to a point when there are no more bids. A bidder not only observes the valuations of other people but also gets an ...
[100]
[PDF] Pricing in Online Auction Procurement: A Review of Empirical ...
One of the major benefits of using online auctions is the reduced procurement cost [Murphy, Soni and Ghosh (2004)], where the procurement price is often lower ...
[101]
Deterring collusion with a reserve price: an auction experiment
Mar 14, 2025 · Since the ability to detect it may discourage collusion, a handful of papers propose empirical methods to do so. These methods involve comparing ...
[102]
[PDF] Optimal Auction Design Roger B. Myerson Mathematics of ...
Oct 19, 2007 · By announcing a reservation price of 50, the seller risks a probability. (1/2)" of keeping the object even though some bidder is willing to ...
[103]
[PDF] Optimal Auction Design
By announcing a reservation price of 50, the seller risks a pro. (1/2)n of ... [6] Myerson, R. B. (1979). Incentive Compatibility and the Bargaining ...
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[PDF] FIeld Experiments on the Effects of Reserve Prices in Auctions
tion theory: increasing the reserve price decreases the number of bids received and the probability of selling the good, and increases auction revenue for goods ...
[105]
Empirical Evidence on the Impact of Reserve Prices in English ...
Mar 25, 2013 · 1 The impact of setting a reserve price in an auction has two effects on revenue: on the one hand, it may enhance it, because if properly set, ...
[106]
[PDF] Reserve Prices in Internet Advertising Auctions: A Field Experiment
Oct 31, 2023 · Overall, our results show that reserve prices in auctions can have a substantial impact on revenues and that economic theory provides a ...
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[PDF] reserve price effects in auctions: estimates from multiple rd designs*
We present evidence from 260,000 online auctions of second-hand cars to identify the impact of public reserve prices on auction outcomes.
[108]
(PDF) The impact of the buy-it-now option on online auctions
Jan 23, 2015 · (eBay 2005). In this research, we study the impact of BIN from sellers' perspectives through an empirical. investigation ...
[109]
How do sellers benefit from Buy-It-Now prices in eBay auctions?
eBay auction prices are substantially below those expected in second-price auctions. •. Higher revenue and efficiency in auctions with a BIN-price than without ...
[110]
The Impact of eBay's Buy-It-Now Function on Bidder Behavior
Aug 6, 2025 · ... Additionally, the data show that, on average, the use of Buyout Options does indeed tend to raise seller revenue. In a subsequent study, ...
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Temporary and Permanent Buyout Prices in Online Auctions
May 1, 2007 · A temporary buyout option disappears once a regular bid is submitted, whereas a permanent option remains available until it is exercised or the ...
[112]
The seller's listing strategy in online auctions: Evidence from eBay
Based on the model, we conduct the counterfactual analysis and examine the tradeoff between the expected revenue and sale duration for the three listing formats ...
[113]
[PDF] Sequential Auctions with Synergies in the Presence of More Than ...
Sep 27, 2019 · A sequential auction involves selling several objects in a sequence, but only one object at a time. The objects sold in a sequential auction may ...
[114]
[PDF] Sequential Auctions and Auction Design
Abstract. Often an auction designer has the option of selling, or purchasing, those lots available in one auction or a sequence of auctions.
[115]
Tag: VR in Auctions - Libra Liquidity
Feb 7, 2025 · How It Works: VR allows buyers to view items in 360-degree detail, inspecting every angle and component without needing to be on-site. Example: ...
[116]
Auctioneering Technology: The Next 30 Years - AuctionMethod
Jul 3, 2025 · Virtual Showrooms. Bidders will "walk through" virtual auction houses, examining items from every angle. High-resolution 3D scans will reveal ...
[117]
How Online Auction Platforms Work: 2025 Features & Tech Trends
Apr 15, 2025 · Additionally, virtual reality (VR) elements are making auctions more interactive. Users can explore items in a simulated environment before ...
[118]
[PDF] Competitive Bidding in Auctions with Private and Common Values
This paper develops a model in which bidders' information consists of both private and common value components. Our stylized two-signal model nests the two ...
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https://www.parisschoolofeconomics.com/compte-olivier/Chapter11Auctions.pdf
[120]
[PDF] The winner's curse story begins with Capen, Clapp, and Campbell ...
The winner's curse story begins with Capen, Clapp, and Campbell (1971), three petroleum engineers who claimed that oil companies suffered unexpectedly low ...
[121]
Anomalies The Winner's Curse - American Economic Association
The winner's curse cannot occur if all the bidders are rational (see Cox and Isaac,. 1984), so evidence of a winner's curse in market settings would constitute ...
[122]
The Case of Federal Offshore Oil and Gas Lease Auctions - SSRN
The bid data is consistent with oil and gas leases being common value assets, and with the prediction that the winner's curse can prevent rings from forming on ...
[123]
Does consortium bidding by private equity firms undermine ...
Jul 18, 2007 · Thus, participants in an auction tend to reduce their bid prices to avoid the winner's curse. However, when bidders share information ...Missing: mitigate | Show results with:mitigate
[124]
Machine Learning-Powered Combinatorial Clock Auction
Mar 24, 2024 · In this paper, we address this shortcoming by designing an ML-powered combinatorial clock auction that elicits information from the bidders only via demand ...Missing: assisted | Show results with:assisted
[125]
One ML-Powered Combinatorial Auction to Rule Them All - arXiv
Nov 14, 2024 · Abstract:We study the design of iterative combinatorial auctions (ICAs). The main challenge in this domain is that the bundle space grows ...Missing: assisted | Show results with:assisted
[126]
[PDF] Do Auctioneers Pick Optimal Reserve Prices?
The seller must determine the reserve price r in the auction given that bidders are assumed to follow this strategy. The optimal reserve price under risk ...
[127]
[PDF] Reserve price efficiency: evidence from the fine art market
We identify the efficiency of a passed-in auction's reserve price with reference to the highest bid in a later, successful auction: if the passed-in auction's ...
[128]
Art market inefficiency - ScienceDirect.com
The art market is inefficient due to price distortions from unreported sales, undisclosed reserve prices, and opaque price formation. Auction markets are not ...
[129]
Setting Starting Bids for Nonprofit Live Auctions: FAQ Guide - Winspire
Jun 24, 2025 · A good starting bid amount is 30-50% of the item's FMV. Starting bids for unique or high-value prizes should be on the upper end of that range.
[130]
New York City Repealed Laws Governing the Auction Industry ...
Jul 19, 2022 · Today, the prohibition has been lifted on auctioneers taking chandelier bids above the reserve price. It will be interesting to see what impact ...
[131]
What is (wrong with) “Chandellier Bidding?” - Center for Art Law
Mar 1, 2009 · S02523Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder.
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https://westerntradingpost.com/blog/do-reserves-help-or-hurt-the-auction-process/
[133]
Bid Rigging - Federal Trade Commission
Bid rigging can take many forms, but one frequent form is when competitors agree in advance which firm will win the bid.
[134]
[PDF] COMPARING OPEN AND SEALED BID AUCTIONS
A main insight of their work is that sealed bidding tends to favor weaker bidders. In the equilibrium of an open auction, the bidder with the highest value wins ...
[135]
[PDF] Discussion Paper No. 817 - COLLUSION IN AUCTIONS
Robinson (1985) has noted that cheating can be deterred in a one- shot English or second-price sealed bid auction even without any threats of future punishment.<|control11|><|separator|>
[136]
Preventing And Detecting Bid Rigging, Price Fixing, And Market ...
Oct 10, 2023 · Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution by the Antitrust Division of the United States ...
[137]
Four Individuals Plead Guilty to Bid Rigging and Price Fixing in ...
Feb 27, 2024 · Four erosion control company owners or managers pleaded guilty to rigging bids and fixing prices as part of a conspiracy targeting a total of over $100 million.
[138]
DOJ Antitrust Division Secures $8.5 Million in Bid-Rigging Penalties ...
Jun 14, 2021 · On May 11, 2021, Contech entered a guilty plea, and agreed to pay more than $8 million in fines and restitution for its admitted bid-rigging and fraud.Missing: auctions | Show results with:auctions
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Secure blockchain bidding auction protocol against malicious ...
This paper proposes an electronic bidding auction system based on blockchain against malicious adversaries, which uses the secure multi-party computation.
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Auctioning Spectrum Rights - What Can We Help You Find?
Feb 20, 2001 · This paper explains why auctions are superior to comparative hearings for selecting among mutually exclusive applications for spectrum licenses.
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[PDF] The FCC Spectrum Auctions: An Early Assessment - Peter Cramton
This paper analyzes six spectrum auctions conducted by the Federal Communications. Commission (FCC) from July 1994 to May 1996. These auctions were simultaneous ...
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[PDF] The STaTe of DigiTal CommuniCaTionS 2019 - Connect Europe
Since 2000, European telcos have spent €110bn on 3G bands, €37.6bn on 4G bands and – while at the very beginning of the process – they have already spent €12.4 ...
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(PDF) The Third Generation (Umts) Spectrum Auction in Germany
Aug 9, 2025 · The spectrum auctions for UMTS licenses totaled €50.8 billion and were paid to the German Government, that is €615 for any German inhabitant ...
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[PDF] The Biggest Auction Ever: the Sale of the British 3G Telecom Licences
We discuss the merits of auctions versus “beauty contests”, the aims of the auction, the problems we faced, the auction designs we considered, and the mistakes ...
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[PDF] How Can the Air Force Maximize the Value of Reverse Auctioning ...
Mar 14, 2002 · DOD has completed several successful implementations of the reverse auction process focusing primarily on procuring low cost, Information ...
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Additional Guidance Could Help Increase Benefits and Reduce Fees
Jul 18, 2018 · We found reverse auctions often led to a vendor bidding more than once with a lower price, and may have saved the government up to $100 million in 2016.Missing: empirical | Show results with:empirical
[147]
Reverse Auctioning: Saving Money and Increasing Transparency
Oct 17, 2011 · Wyld's research also estimates that the Department of Defense alone could save nearly $6.1 billion by increasing its use of reverse auctions.Missing: DoD empirical
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Price Discovery - CME Group
Price discovery refers to the act of determining a common price for an asset. It occurs every time a seller and buyer interact in a regulated exchange.Missing: Chicago Mercantile
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Commodities - CME Group
Discover the widest array of commodities products traded on a single exchange, with deep liquidity and transparent pricing.
[150]
Real Estate Auction Vs. Traditional Sale | What's the Difference?
Real Estate Auction vs. Traditional Sale ; Generally, auction sales take less than 30 days to occur. Property may remain on the market for months or even years.Missing: empirical evidence
[151]
Auctions vs Traditional - Vaughn Roth Land Brokers
Speed of Sale: Auctions typically have set dates and a defined timeline, which can lead to a quicker sale compared to the potentially longer process of a ...Missing: empirical evidence
[152]
Auction Versus Negotiated Sale: Evidence from Real Estate Sales
Aug 7, 2025 · They find that auctions are associated with higher transaction prices than negotiated sales, but only when demand for the property is strong, ...
[153]
Our global ranking of auction houses - The art market in 2023
In 2023, Sotheby's took first place with $3.8 billion, followed by Christie's at $3.5 billion, and Phillips at $573 million. Bonhams was fourth with $219 ...
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2023 Auction Wrapped | The top 10 most expensive paintings sold ...
Dec 28, 2023 · In 2023, the total value of the ten most expensive paintings sold at auction was US$675.4 million, down US$44.5 million from last year.
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[PDF] The value of experience: evidence from art auctions - Adeimf
Our results confirm that pre-sale estimates provided by experienced auction houses contribute to art market efficiency by improving the quality of information ...<|control11|><|separator|>
[156]
[PDF] Market Evolution of Art Dealers - American Economic Association
Oct 31, 2017 · As a result, the total amount of buyers at auction increased, which further improved liquidity and efficiency in the market. In summary, the ...
[157]
eBay Inc. Reports Fourth Quarter and Full Year 2024 Results
In 2024, eBay enabled $75 billion of gross merchandise volume. For more information about the company and its global portfolio of online brands, visit www ...
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eBay Inc. Reports Fourth Quarter and Full Year 2024 Results
Feb 26, 2025 · In 2024, eBay enabled $75 billion of gross merchandise volume. For more information about the company and its global portfolio of online ...<|separator|>
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[PDF] Online Auctions: A Survey of the Empirical Research
This paper surveys recent studies of Internet auctions. Four main areas of research are summarized. First, economists have documented strategic bidding in ...
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The Impact of the Web on Auctions: Some Empirical Evidence and ...
Aug 6, 2025 · This paper considers the impact that the Web is having upon auctions: their viability, operation and diffusion.
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[PDF] Measuring the Benefits to Sniping on eBay: Evidence from a Field ...
ESnipe is one example of an online service that allows a bidder to submit a snipe bid for an auction and the time they would like to submit the bid long before ...
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[PDF] Is Sniping A Problem For Online Auction Markets?
1. In this paper we explore the effects of losing an auction to such a late bidder, in particular how such an experience affects the future participation of ...
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Online Auction Market Report | Global Forecast From 2025 To 2033
The global online auction market size was valued at approximately USD 5.25 billion in 2023 and is projected to reach USD 11.3 billion by 2032, growing at a CAGR ...
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How auction houses became the big winners of the pandemic
Feb 7, 2022 · Christie's said that in 2021 a digital audience of 3.3m people engaged with its livestream auctions through various online channels. As long as, ...Missing: acceleration | Show results with:acceleration
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Auction Trends in 2025: Three Trends to Watch - LinkedIn
Mar 18, 2025 · An example of this is Virtual Reality (VR) and Augmented Reality (AR) technologies, which is set to transform the way buyers interact with ...
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NFTs in 2025: Key Trends, Innovations, and Market Shifts
Dec 24, 2024 · Explore NFTs in 2025: from real-world utility and art to gaming and beyond. Discover how regulation, tech, and community will shape digital ownership.Nfts In 2025: Key Trends... · Nft Utilities And Real-World... · Technological Innovations
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Top NFT Trends and Statistics in 2025 - Exploding Topics
Oct 15, 2025 · There are more than 100 active NFT marketplaces in 2025. The most popular is OpenSea, which saw 7.8 million visits in September 2025. Domain ...Missing: innovations | Show results with:innovations
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Robust Data-Driven Auction Design - ACM Digital Library
Aug 3, 2025 · In the field of auction design, leveraging deep learning to solve optimal auctions from sampled data has become a promising direction.
[169]
Virtual Reality in Auction Houses - Hookson
Jul 11, 2024 · Auction houses have seamlessly integrated VR and AR into their existing digital channels. Websites now feature VR tours and 3D views, ...
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Technology is Shaping the Future of Online Auctions - aShareX
Feb 3, 2025 · Augmented Reality (AR) and Virtual Reality (VR): AR and VR technologies are enhancing the online auction experience by allowing users to view ...
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[PDF] Empirical Models of Auctions∗
Mar 13, 2006 · Auctions have provided a fruitful area for combining economic theory with econometric analysis in order to understand behavior and inform ...<|control11|><|separator|>
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[PDF] The Benefits of Spectrum Auctions for Wireless Consumers ... - CTIA
In addition, enhanced flexibility and funding will provide much needed and improved equipment, cybersecurity, and more efficient and interference-free federal ...
[173]
https://www.aeaweb.org/articles?id=10.1257/aer.86.2.388
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Spectrum Auctions: There Is Elegance in the Mundane - ProMarket
Oct 20, 2020 · Stanford estimates the total amount of government revenue generated by spectrum auctions worldwide at over $100 billion. A 2012 PCAST report on ...
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The Importance of Licensed Spectrum and Wireless…
... spectrum auctions pertaining to wireless services have raised $155 billion in revenues. During the decade, wireless network operators invested $265 billion ...
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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=237408
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Treasury Securities Auctions Data
The Treasury Securities Auctions Data dataset provides data on announced and auctioned marketable Treasury securities.
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About Auctions - TreasuryDirect
We sell U.S. Treasury marketable securities through auctions. In 2024, we held 440 public auctions and issued about $28.5 trillion in Treasury marketable ...
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When failure is an option: Fragile liquidity in over-the-counter markets
Overall, auction-based over-the-counter markets become illiquid and fragile, especially during stressful periods for low-rated assets.Missing: distress | Show results with:distress
[180]
Auctions and Negotiations in Housing Price Dynamics
Prices at auction exhibit almost no momentum and are highly predictive for future prices determined through negotiations. Negotiations, however, exhibit ...
[181]
https://www.tandfonline.com/doi/full/10.1080/08965803.2025.2516889
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[PDF] An Empirical Analysis of Price, Quality, and Incumbency in ...
In fact,. Snir and Hitt (2003) suggest that many buyers might use auctions to gather price information in order to negotiate with their incumbent suppliers.
[183]
The impact of auction choice on revenue in treasury bill auctions
I find that both agree on the revenue-superiority of discriminatory auctions, by between 0.01% and 1.5%; the models' predictions are contradictory in only 7% ...
[184]
[PDF] Improvements to auction theory and inventions of new auction formats
Oct 12, 2020 · In this way, insights from auction theory have helped unify the analysis of different trading institutions. For example, the problem of.Missing: institutionalization | Show results with:institutionalization
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[PDF] Robert B. Wilson - Prize lecture in economic sciences
describes some of his many contributions to auction theory, and applica- tions to designs of novel auction formats. Milgrom and Weber's [31] demonstration that ...
[186]
(PDF) Auction versus Negotiation in Public Procurement: Looking for ...
The relative efficiency of auctions and negotiations is still a puzzle in the literature. While auctions are the prescribed procedures and the most used ...
[187]
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3279292
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The effects of shilling on final bid prices in online auctions
We examine the effect that premium bids have upon the final selling price, since they are linked with reserve price shill bids. We use 10,260 eBay auctions ...
[189]
Ready-Mix Concrete Company Admits to Fixing Prices and Rigging ...
Jan 4, 2021 · “Price fixing, market allocation, and bid rigging are not only unethical, but illegal. The division, along with its law enforcement partners, ...
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[PDF] Roundtable on Ex-Officio Cartel Investigations and the Use of ...
Sep 27, 2013 · Illustrative are recent prosecutions for bid-rigging and fraud in real estate foreclosure auctions in Northern. California. To date, 36 ...
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Bid-Rigging Remains Focus of DOJ Antitrust Criminal Enforcement
Dec 30, 2012 · For fiscal years 2010-2012, the average prison sentence obtained has been 25 months, up from 20 months for fiscal years 2000-2009 and 8 months ...
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The Role of Reputation Systems in Reducing On-Line Auction Fraud
Aug 6, 2025 · To prevent false-positive detection results, a correction mechanism called time slice verification (TSV) is used to certify a node's ...
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Shill Bidding Prevention in Decentralized Auctions Using Smart ...
May 30, 2025 · This paper presents a conceptual framework that applies dynamic, behavior-based penalties to deter auction fraud using blockchain smart contracts.Missing: technology mitigating rigging 2020s
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Antitrust Case Filings | United States Department of Justice
Antitrust cases include Civil Merger, Civil Non Merger, Criminal, and Other types, handled by the Antitrust Division and U.S. Attorneys.<|separator|>
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[PDF] SYMMETRIC AUCTIONS - Yale Department of Economics
One reason for their popularity is that the rules of these auctions are “fair” in that they are anonymous and nondiscriminatory. In an independent private value ...
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How auctions promote efficiency and neutrality by Robert Wilson
May 19, 2023 · Designing for fair competition: how auctions promote efficiency and neutrality · Markets, which provide us the ability to trade goods and ...
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Let the Market Decide: An Experimental Study of Competition and ...
Is competition perceived as a fair procedure? We report data from laboratory experiments where a powerful buyer can trade with one of several sellers.
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Empirical perspectives on auctions - ScienceDirect.com
Section 4 considers oil and gas lease auctions with topics on common value and winner's curse, bidding and drilling and some miscellaneous topics. Section 5 ...
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Promoting Entry and Efficiency via Reserve Prices - MDPI
Jun 29, 2022 · The reduction in the number of bidders caused by the reserve price in this situation is detrimental for both revenues and efficiency. This work ...
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Efficiency in asymmetric auctions with endogenous reserve prices
This paper endogenizes the reserve price and shows that it may be lower in the FPA. Hence, gains from trade are realized more often in the FPA.
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[PDF] SPECTRUM AUCTIONS: THIRTY YEARS IN THE MAKING - CEPA
The first FCC spectrum auction in 1994 was modest in scale, with only 10 nationwide licences up for grabs. Nevertheless, it raised $617m and was regarded a.
[202]
[PDF] Spectrum Auctions - Systems Engineering and Operations Research
Often, spectrum auctions were only considered when other attempts at allocation (administrative evaluation and lotteries) failed. We will say more about ...<|separator|>
[203]
Favoritism in asymmetric procurement auctions - ScienceDirect.com
The mention of “favoritism” generally evokes negative images of corruption and cronyism. As common thinking goes, only the favored party gains while ...
[204]
Discretion and Favoritism in Public Procurement - Oxford Academic
I also build on the literature of political favoritism in procurement (Goldman ... crony companies is less inflated by the effect of political favors.
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Favouritism and corruption in procurement auctions - IDEAS/RePEc
This paper analyses the impact of favouritism and corruption in procurement auctions in an emerging economy. In our model there are two firms: One is the ...
[206]
(PDF) Procuring Low Growth: The Impact of Political Favoritism on ...
Jun 16, 2025 · PDF | This paper assesses the impact of favoritism in public procurement on private sector productivity growth.
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[PDF] The Merits of Reverse Vickrey Auctions in Public Procurement And ...
An underutilized 60-year-old auction style, the Vickrey auction, might hold the key to revolutionizing Government procurement with minimal investment costs to ...
[208]
Advancing ecosystem services auctions: Insights from an ...
Auctions can increase PES efficiency, reveal private costs, and engage stakeholders, but uptake has been slow. •. Challenges include participation, accounting ...
[209]
Ecosystem Services Auctions: The Last Decade of Research - MDPI
Auctions offer potential cost-effectiveness improvements over other mechanisms for payments for ecosystem services (PES) contract allocation.